Buying a great short term vacation rental property is all about staying ahead of the competition which, in today’s competitive real estate market, is easier said than done. But it’s not impossible. The secret is knowing where to look, and how to pursue less conventional routes. If you understand how to navigate the world of off-market real estate, you put yourself one step ahead of the pack!
This article will help you understand what off-market real estate properties are, the advantages of securing one, and how to find off-market properties for short term rental. You’ll be an off-market real estate pro in no time!
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Firstly, it’s important to understand the concept of multiple listing services (MLS). An MLS is a collection of data about properties for sale that brokers use to share information and close deals between sellers and buyers. Real estate agents pay an annual fee to be part of these groups and often belong to more than one at a time. It is also where sites such as Zillow get their listing information. There are over 900 multiple listing services in the United States alone.
Off-market real estate refers to properties that are not listed on an MLS. You may also see these properties referred to as non-MLS listing or pocket listings. They are looked at as the best-kept secrets in the real estate industry. Real estate agents tend to reserve these properties for investors they know are likely to be interested and/or make a deal… hence the term “pocket listing.”
It can be a little tricky to find these properties since they aren’t publicly available. But just by knowing where to look, what to look for, and how to approach sellers, you can easily close a deal on an off-market property.
Why would property owners choose to sell off-market?
There are many reasons why a property owner may choose to sell their property as an off-market listing. Privacy can be a driving factor… they may be dealing with a financial situation they don’t want to broadcast or have a job that requires privacy. Selling a property off-market also helps to weed out buyers who aren’t qualified or serious about making an investment.
Unsurprisingly, many sellers don’t want to deal with the chaos of showings if there isn’t any sort of reassurance they will get an offer. It’s uprooting to have strangers walking through your home all the time! Keeping their property as an off-market listing gives them a lot more control over who they market the property to and, therefore, who ends up buying the property. It helps sellers avoid a lot of the hassle and headache typically associated with selling a property.
Advantages of buying off-market properties
The crypticity of off-market listings is made up for by the major advantages of investing in properties this way. There is a reason why a seller chooses to reserve a property as a pocket listing! If a seller is confident enough in their property that they don’t need it listed on an MLS, it’s safe to assume they are sitting on somewhat of a gem. Here are a few advantages of buying off-market properties:
It doesn’t come as a surprise that there is a lot less competition with off-market properties. This is a huge advantage to buyers considering how competitive the real estate market has become, especially in high-demand locations. In some places, the market is so competitive that non-MLS listings are the only way to find a property. This way you won’t have to fight your way through the crowds of buyers to get your offer to the seller.
Since off-market deals take place in a much less stressful environment, sellers are usually more open to negotiating. You will likely find it easier to negotiate a price and contract terms that work for you and your short term vacation rental business with pocket listings. There tends to be more flexibility with the timeline as well. Since you aren’t competing with multiple offers, there is no reason to speed along the process and off-market property sellers aren’t in a rush. This means you can afford to really think through your options, consider your investment, and close with confidence.
How to find off-market properties for short term rental
Hunting down off-market properties is not as complicated as it sounds. Often, the best tactic is to have many different approaches until you find what you’re looking for. If the first attempt isn’t successful, keep trying! Off-market real estate can turn into a waiting game that requires patience and consistency. Check out some of the methods we suggest to find off-market properties for sale:
Did you know Zillow allows sellers to list a property on their site before it is listed in an MLS? And they aren’t the only online database with this feature. Set up notifications with sites like these and check their databases frequently to be the first to know about new properties that fit your criteria. You can also find off-market properties on sites like Craigslist and eBay.
Properties worth investing in will get scooped up quickly so it is of utmost importance that you actively watch these sites and act swiftly. Make it a habit to frequently check back on these sites so you don’t miss out on anything. Some sites such as HUD Home Store tallow you to set up notifications so you know as soon as new properties pop up.
Check public records
Keeping an eye on public records is the best way to ensure you are the first to know about any new properties for sale. An informed investor is a successful investor. You should especially look for foreclosure, pre-foreclosure, and short-sale properties as these are frequently profitable investment opportunities.
Also, it’s important to note that the details of who owns a property are typically public information. If a certain property has caught your eye, try to work out who owns it and how to get in touch with them. Get creative here… if you can’t find their phone number or mailing address you might be able to connect with them through social media channels like LinkedIn.
Before reaching out to property owners, be sure you have a really solid offer. Since their property isn’t publicly for sale, they might not be sure they want to sell it until they get an offer they can’t turn down. Your job is to convince them why selling their property to you would be beneficial to them.
Directly market to property owners
This leads to our next point… don’t be afraid to reach out to property owners directly! One of the most common ways of doing this is through direct mail marketing which involves contacting the owners of properties you’re interested in via mail. Employ the above tip of using public records to find an owner’s mailing address and send them an offer.
The advantage of this method is you are likely the only person contacting them with an offer. The only downside is because they aren’t actively selling their property, it is definitely possible they just are not interested in selling. But you will never know until you reach out! As the saying goes… you miss 100 percent of the shots you don’t take.
Connect with real estate agents
At the end of the day, real estate agents and brokers are the ones keeping these listings in their back pockets. And they already have a list of investors they have relationships with that they will present new properties to.
The best way to be the first one to know about new off-market listings is to establish relationships with prominent real estate agents in the area. You want to be one of those investors on their list! Once agents see you are serious about investing in short term vacation rental properties, they will start to present you with properties you might be interested in.
Network (with everyone)
Who should you network with? Everyone!
Connect with investors, sellers, real estate brokers, private lenders and contractors (they usually know about a property going up for sale before anyone else). You just never know where one connection may lead. The off-market real estate world has everything to do with who you know and who knows you. You should put just as much time into establishing your reputation as you do connecting with others.
Make sure sellers know that you are serious and qualified to invest in short term rental properties and share your previous experience/success to show them you are reputable.
Attend real estate auctions
Real estate auctions are a great place to find properties with short term vacation rental potential at a fraction of the price. They take place both online through real estate auction websites and in person. You can find the date, location, and listing information of upcoming real estate auctions in your area by visiting your county’s government websites and checking local newspapers. Auctions are a competitive environment so be prepared to bid and stand your ground on something if you’re really interested.
Drive for dollars
The real estate term “drive for dollars” refers to investors walking or driving through neighborhoods looking for investment opportunities. When investors drive for dollars they are typically looking for distressed homes that will likely go on the market soon.
Signs of a distressed home include an unmaintained yard, boarded windows, notices on the door… anything that may hint at the property being vacant. You would then make a note of the address and later see if you can use public records to identify the owner. This method is effective if you already have a neighborhood you’re interested in investing in.
Should you expand your portfolio with off-market houses?
In summary, short term vacation rental investors should consider off-market listings when trying to land a property in a highly competitive real estate market. With a little research and patience, off-market properties are not nearly as hard to find as it seems. They offer investors a unique opportunity to invest in properties that haven’t been seen by many buyers which allows for much more flexibility and tranquility when negotiating a deal.
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