Driving for dollars, for those of you who are unaware, is simply the process of driving targeted subdivisions with the intent of locating distressed and or abandoned properties. This is a guide intended to help aid investors in locating distressed properties by “driving for dollars” from steps A to Z, from locating properties to marketing. This method can be utilized by real estate investors, wholesalers and bird dogs alike.
Defining a Market Area:
Before stepping foot in your car, it’s a good idea to establish an area to drive. This will depend on your target market area, exit strategy and multiple other factors such as: tax assessed value, house age, zip codes, crime rates etc. Whatever your criteria the same concept applies. Once you have your target area defined, make a list of subdivisions within that area you would like to drive.
What You Will Need
Check out our detailed checklist here, but quickly what you will need is:
- Street List
- Magnetic Signs
- Marketing Material
- Print out worksheet
- Pens or pencils (We’ve had to stop numerous times to buy a pen!!)
Once your list of subdivisions is complete make a simple excel file to print out for use in the field. Alternatively, make a grid on paper. In addition, bring a camera to take pictures of any distressed and or vacant properties you may find. Note in your print out worksheet which camera pictures are associated with a given house.
Street Scene Analysis
The key component when driving for dollars it to be vigilant and observant at all times. In general, the best time to drive is from 10:00 a.m. to early afternoon during the weekday. At this time people are typically at work and it makes it easier to take your time driving through the subdivision.
This process becomes easier if you are driving for dollars during Halloween, Christmas or a trash pickup day. Why? When Christmas or Halloween is approaching a good portion of the neighborhood will have decorations of some sort on display. Likewise, during trash pickup day, garbage canisters will be out on the streets. Vacant properties stand out like a sore thumb, as they won’t have decorations during the holidays or a trash can out front on pick up day.
Red Flags to Look For
When driving for dollars there are several “red flags” you should pay attention to. For example:
- Tall Grass
- Boarded up or broken Windows
- Mailboxes filled to the brim
- Code Enforcement taped to the door
- Piled up newspapers
- Overgrown vegetation
- Deferred maintenance
As you drive the neighborhoods and locate distressed properties, record the address and any additional notes in your print out worksheet. Take a picture or two of the property as well. Try and take the “best” worst picture of the property as possible, this will come in handy later.
Market to Your Leads
Once you have finalized your list its simply a matter of selecting your marketing piece of choice, whether that’s a yellow letter or postcard. In our business we receive the best response rate by using custom invitation style hand addressed envelopes. Select one camera shot from your driving for dollars work and send it to the owner in the envelope. Along with what your business does and how you can be of service.
Make certain to use the owner address for your mailing address. If the property is owner occupied the mail will go to their personal residence, and if its an absentee owner it will go to wherever there primary residence is located. Continue to mail any leads you find in this manner every 2 to 3 months. Remember the key to success is to be consistent and persistent with your marketing campaign. You will yield the best results with repeat mailings. If the property is owned by the bank, cal and ask to talk to the REO manager to see if you can make an offer.