As a real estate investor, one of the more challenging tasks of the business is finding a profitable property to invest in — known as real estate lead generation — whether that’s flipping or creating a rental portfolio.
What if there was a way that you could find profitable and off-market properties with little effort and little money?
You can with a strategy called driving for dollars.
What is Driving For Dollars?
Driving for dollars in real estate is a method of finding distressed or abandoned property for investment by driving around targeted neighborhoods and communities.
The beauty of this strategy is that it can be done with little effort on your part — and little money.
Real estate investors use driving for dollars to find vacant or distressed homes that may be available at a significant discount.
When they purchase the property, they can make needed renovations and improvements, sell the home, and realize a nice profit.
What to Look for when Driving for Dollars
Driving for dollars can yield profitable results — if you know what to look for when driving.
Keep in mind that you are trying to find off-market properties that may be vacant and available at below market value.
Here are some things to look for when you are driving for dollars:
An Overflowing Mailbox
If you see mail piling up or newspapers on the driveway or front porch, it can be a good indication that the property is vacant, and it may be worthwhile to find out if the owner is looking to sell.
Need for Repairs
As you drive, keep an eye out for a property that has an obvious need for repairs. This can include:
- peeling paint
- overgrown yards
- broken windows
- and more
No Window Coverings
There is a good chance that a house without any window coverings is vacant.
The Absence of Vehicles
If there is no car in the driveway in front of a dilapidated house time and time again, it’s likely that it’s no longer occupied.
No Trash Cans at the Curb
If you are in the neighborhood on a garbage collection day and the property does not have a trash can out, it can be an indication that the house is vacant.
Next, we’ll look at the WealthFit-approved Driving For Dollars Strategy.
The 7-Step Driving for Dollars Strategy
Driving for dollars can be a highly successful real estate investment strategy if done the right way. But it’s more than just driving around and looking at properties.
It includes taking notes, finding the owners, direct mail marketing and more.
Here is a step-by-step guide for driving for dollars and finding a profitable real estate deal.
Driving For Dollars Step #1: Pick an Area and Focus on It
A successful driving for dollars strategy begins with choosing the right area and focusing on it. This requires research: for example, is there a local area that is growing with jobs, creating the opportunity for more families to move in?
Keep in mind the demographics of the area, too. For example, choose a neighborhood that has low crime and low turnover.
Once you have your area chosen, it’s time to move to the second step in our driving for dollars strategy.
Driving For Dollars Step #2: Begin Driving to Look for Distressed Properties
Once you have your neighborhood chosen, it’s time to begin driving.
But don’t drive for dollars randomly. For example, set your schedule to drive for dollars and go on trash collection day so you can see houses without a trash can at the curb.
Also, go during daylight hours so you can examine the home properly.
It’s critical to do something as you drive for dollars. We’ll look at that next.
Driving For Dollars Step #3: Take Notes and Photos
When driving for dollars, you’re looking for quite a bit of information on a property, too much information to remember off the top of your head.
- The address of the property
- Any damage that can be seen
- A photo of the house (Pro Tip: including the house number in your photo can help you later on).
When you return home or back to your office, see if you can find more details about it, including its square footage and price over time.
You can use important real estate formulas to help determine the profitability of the property, such as:
It’s important to organize all this information for the next step.
Driving For Dollars Step #4: Skip Trace, Finding the Property Owner’s Information
The next step is to find the owner of the property to determine if he or she wants to sell.
If you have no leads on how to get in touch with the owner, you can use state or municipality records online.
Driving For Dollars Step #5: Begin Sending Direct Mail, Call or Use Other Ways to Talk with the Owner about Selling
Once you know how to get in touch with the owner, the next step is to determine whether or not they want to sell — and what it will take to get them to sell.
- Use direct mail
- call if you have a phone number
- leave a letter on the property door
If the property is vacant, keep in mind the owner may have a neighbor checking on the house or may come by in person from time to time.
Driving For Dollars Step #6: Make An Offer
Using all the information you’ve gathered, you can make an offer.
Keep in mind that if the house is not the MLS, chances are the owner has not received offers on the house.
Also, if there is no real estate agent involved in the sale, a motivated seller may be willing to accept a below market price.
Driving For Dollars Step 7: #Close the Deal
After the owner signs on the bottom line, you are on your way toward fixing up the property, flipping it or renting it out.
After that, you can start back at driving for dollars step #1 and look for your next profitable deal.
There are a few driving for dollars apps and resources that you can use to simplify the process.
DealMachine is the highest rated real estate investor software for lead generation on the Apple App Store and Google Play Store. The app makes it easy to track down contact information of property owners and send them mail.
DealMachine has three levels:
- Basic, $49 per month
- Professional, $99 per month
- Enterprise, $2990 per year
You can learn more about it here.
Considered “the most advanced and comprehensive parcel data and property line map application,” Landglide is a comprehensive data mobile app that uses GPS technology to pinpoint exact locations that can be a tremendous resource for those driving for dollars.
The app covers over 95% of the US population and affords access to 150 million parcel records in more than 3,000 countries.
As far as pricing, Landglide is:
- free for the first seven days
- $9.99 per month
- $99.99 per year afterward
You can learn more about it here.
Homesnap is “the real estate industry's national search portal, featuring the same accurate, real-time information that agents use.”
It provides real-time MLS data along with enhanced user experience features that can be useful for those driving for dollars. The app is designed for both real estate investors and realtors, too.
Homesnap charges real estate agents $299 for the first year and $599 upon renewal, and it is free to others.
You can learn more about it here.
Driving For Dollars FAQs
Next, we’ll look at the most commonly asked questions associated with driving for dollars.
Q. Does Driving for Dollars Work for Wholesaling Real Estate?
Driving for dollars does work for wholesaling real estate.
Just as driving for dollars works for flipping, the strategy is effective for wholesalers looking for below market property.
Q. Do You Need a Script When Driving for Dollars?
A short, friendly script explaining why you are calling and asking if the owner is interested in selling can be helpful when driving for dollars — but it isn’t required.
Q. What is Virtual Driving for Dollars?
As the name implies, virtual driving for dollars is performed on your computer by searching for suitable below-market properties on an app like DealMachine.
The Bottom Line: Driving For Dollars
By using the classic driving for dollars strategy you can find motivated sellers of undervalued property and make great off-market deals.
- select your target area carefully
- keep careful records and use modern apps that can make the process automated and easy
Tracking down owners of vacant property and convincing them to sell can be time-consuming.
But keep in mind that finding a motivated owner is a numbers game.
Don't get discouraged if you contact 50 or 100 potential sellers and only close a single deal, because that single deal can net you a tremendous profit for your real estate business.