As investors, we are like the traditional farmer who designates an area for a particular crop, prepare the soil, plants the seeds, then waters and fertilizes until it’s time to harvest—only for us, our crop is houses and our harvest produces money. We find and identify various areas which suit our investment style, and then we choose a few to farm. We identify these areas and get familiar with what is there (find the land and till it). We see what the areas have to offer, do our due diligence on the neighborhoods and properties, and then we make our offers (planting the seeds).

What is Driving for Dollars?

How do we find our farming areas and properties? We may take an area, such as a county, and split that up into quarters (northeast, northwest, southwest, and southeast). This can be accomplished within a city as well. After we have split it into manageable areas, we start familiarizing ourselves with the different areas within that section. We can now determine several things. What type and kind of area is it? Is it low income, working income, or moderate income? How much are the properties in these areas—what are sellers asking for these types of properties and what have these types of properties sold for? Once we have discovered this, we can move forward determining exactly which areas we may want to work.

Cultivating Our Market

The next step is to cultivate those areas and plant the seeds. A family member or friend that is a real estate agent can come in handy in this process. Or you can go into any real estate office that has a Realtor to obtain an MLS (multiple listing service) one-liner, which is a report containing just one line information about properties that fit your specifics. Give a real estate agent with MLS access the criteria and parameters of the types of properties to look for, and they can print that basic one-liner list for you. This is done either by city, zip codes, or county areas. For example, you might ask for properties on the market from $0 to $60,000 in a defined area. The MLS one-liner will provide the following information on those properties:

MLS number
Street address
City
How many bedrooms
Baths
Garages
How many square feet of living area
Price
Days on the market (sometimes we are not able to obtain the days on the market, however, if it is supplied, it gives us an indication of how long it has been on the market and perhaps how motivated the seller may be)

In investing, cultivating means that we canvas our farming areas to keep track of what is happening in that area, what is new, and where it is going. We cultivate by getting to know the different areas, the people, and the properties. We make offers and then complete the contract, reaping what we have sowed. Sometimes we will keep this property and rent it out, sell it, or perhaps just wholesale it to someone else, possibly a rehabber, a wholesaler, or an investor.

Cultivating is not just looking at an area, but identifying what is happening there to bring forth any production of crops (in our case potential properties). Are there any—or even many—properties that are boarded up, abandoned, vacant, or ugly? Have you found some properties that need work and are neglected? Do you know how we identify them? Look carefully. Look for window treatments, such as curtains. Have they been moved as you have driven by in that last week? How about garbage day—were the trash bins out? If not, the occupants may be on vacation—or they may have moved. Are there newspapers on the porch and are they starting to pile up? How about walkways or thoroughfares in the grass? If you see trash in the yard, is it new or weathered? If it is weathered, it could be that the person who may live there is away, an invalid, or elderly, or it could be a vacant property. Maybe the owner has passed away or is living in a nursing facility.

You can always knock on the neighbors’ door and inquire about the house next door. Sometimes they will give you a lot of information. Other times they will be tight-lipped. Or you can just knock on the door of the property itself and see if anyone is home. If they are, just let them know that you are an investor looking for properties in the area. They might tell you that they are, or are not, interested in selling. If no one is there, you might walk back to the side of the building and see whether the electric meter is running. Remember where you are—if you are in the city or out of the city limits—as this may affect how long the electric company may leave the meter when a property is vacant. Some cities will take the meter out if it has been vacant more than three months. You could even call the electric company and see what their policies are for vacant properties to find out how long they might leave the meter in the box.

By cultivating your market, you’ll identify potential deals that fit the investment strategies you want to use. And as you increase your cultivating skills, you’ll increase the opportunities you find.

Mich Christensen is a real estate coach for Wealth Intelligence Academy, Inc.