5 Note Investing Strategies to Look at Property
Effective note investing strategies to efficiently look at underlying collateral is crucial as a note investor. A note investor that doesn’t have an idea of the current state of a property is investing with one eye closed. The trouble is that many note investors are out-of-state investors so they can’t easily go and physically look at underlying collateral securing the notes that they are purchasing.
That being said, what are some note investing strategies that can be used to get a real look at a property? Let’s go through these 5 strategies to help you improve this important aspect of note investing due diligence. We’ll have a few bonus strategies thrown in at the end for those of you keeping count.
#1 Physically Go Look
Fly to the market area and physically drive-by each of the properties. While not always feasible for part-time note investors, there are many full-time note investors who prefer to do collateral asset tours. During these tours, the note investors physically look at all of the properties tied to the notes they are looking to purchase.
Quick tip for those investors who are looking to personally inspect each property attached to a note. Only go and perform this step during secondary due diligence, after you have won the initial bid on the notes. Due to the time and expense, many note investors use more efficient note investing strategies below.
#2. Google Maps or Bing Maps
Use Google Maps or Bing Maps to take a look a look at the property from the satellite view, street view and bird’s eye view. Pay particular attention to the date that the image was captured by Google or Bing as many of the photos are several years old. This is a quick initial view of the property, but shouldn’t be your only method of getting eyes on the property.
Also take the time to look at the properties in the surrounding area while you are using Google’s street view. You might be investing in a property in good condition, but the surrounding neighborhood could be filled with blighted houses.
#3. Hire a Property Preservation Company
Order a drive-by report, sometimes called an occupancy report, from a national property preservation company. These companies offer very competitive rates and perform a wide-range of services from board up to occupancy reports across the United States. The company that I use charges $18 for a drive-by, which entails them taking photos of the exterior of the property. If you are looking for a property preservation company, send me an e-mail, I’d be happy to provide an introduction.
#4. Hire a Local Realtor
Have a local realtor drive-by and take photos of the property for you. The general agreement you want to strike with your local realtors is that if you end up purchasing the note and taking back the property, you will give them the business when you are looking to sell the house. Now sometimes a realtor will want to be paid to do a drive-by of the property. I would personally push back if the realtor is looking to be paid upfront. Helping clients out on the front-end in order to build business later on is just part of the job as a real estate agent. An added bonus of having a local realtor check out the house is that they have all of their market knowledge they are carrying with them.
#5. Pay Someone on Craigslist
Pay someone on Craiglist to go out and look at the property for you. This can be an affordable alternative, with good results. However the issue with using Craiglist, is that you don’t have a consistent end product, it all depends on the person performing the service. While this holds true with every service, hiring a company to perform a service usually means that you will have a more consistent result. For this reason, I don’t believe that Craiglist is an effective solution that can be consistently applied across your note investing markets.
Extra – Use a Drive-By Service
Many note investors fall back on using a nationwide service like WeGoLook, TaskRabbit or GigWalk that are pay for service type of companies. I have used WeGoLook before and was not happy with the results. While I haven’t used TaskRabbit or GigWalk, and can’t speak directly to their services, I don’t believe that they specialize in real estate services. For that reason, I would reserve this note investing strategy as a last option if you are in a bind to find someone to perform a drive-by on a property.
Extra – Hire a General Contractor
Hire a general contractor to do a drive-by of the property. This might be one of my favorite strategies if you have a local contractor that is experienced and trustworthy. The reason is that a contractor will be able to perform a drive-by, take photos and give you an accurate estimate, based on exterior conditions, of necessary property repairs. Effectively you are knocking 2 important due diligence steps out by using an experienced general contractor for your property drive-by.
Applying several of these note investing strategies in your note investing due diligence can help you build the efficiencies that will lead to purchasing more real estate backed notes. Personally I prefer to use either a property preservation company, realtor or general contractor to take photos of the property for me.
If you want to read more about due diligence, take a look at NoteVestment.com‘s Ultimate Guide to Note Investing Due Diligence, which is packed with useful tips and content about note investing due diligence. Or if you want to jump back to our other blog posts, you can click here.
As always, thanks for reading!