Updated: Oct 23, 2020
Driving for dollars is a time-tested method for finding off-market deals.
It's straightforward, reliable, and requires a good deal of work.
If you want to learn a method for finding deals that lets you get professional-grade results without needing a ton of capital, special skills, or unique access levels, you'll love this guide.
We'll teach you what driving for dollars is all about and give you everything you need to start finding deals in your local areas THIS WEEK.
Let's get started.
What is Driving for Dollars?
Driving for dollars is the process of driving through local neighborhoods and looking for vacant or distressed homes that can be purchased directly from the owner at a low enough price to earn a profit on resale.
The idea here is that a home that is abandoned or unmaintained is going to be owned by someone who doesn’t value it or doesn’t have the time or resources to invest in it properly.
These types of owners are more likely to sell you the property below market value.
Many forms of real estate investing rely on finding undervalued homes, and while there are a number of ways to find these homes, driving for dollars is the most accessible.
The process of driving for dollars is relatively straightforward:
Drive through neighborhoods
Identify vacant or distressed homes
Find the homeowner info
Reach out to homeowners directly
You don’t need to be particularly knowledgeable, experienced, or savvy to follow these steps.
You don’t need a lot of money to drive for dollars.
You just need time.
It just takes a bit of hustle and persistence.
That’s why it’s such a great option for new investors who have more time than money and want to get real results.
But it’s not just for beginners. Driving for dollars is used by many experienced flippers and wholesalers. In fact, it’s one of the methods we teach in our advanced guide to wholesaling real estate.
So if you want a strategy that you can use now and still benefit from after you’ve closed a hundred deals and are living the good life, driving for dollars is for you.
Let’s look at a quick example, and then we’ll dive into each of the components that makes up driving for dollars.
A Simple Driving For Dollars Example
Laura is a wholesaler. She wants to find deals, so she decides to go driving for dollars.
Laura heads over to an area of town where property values are between $100k-200k and begins driving through neighborhoods, looking for signs that a property might be vacant.
She spots several signs on a few homes, marks them down, and tapes her offer letter to the doors.
After doing this for 2 hours, she has 17 homes on her list and heads home.
When she gets home, she looks up the homeowner info for each home via her county’s property deed records.
She is able to find the correct info for 13 out of the 17 homes, and she mails an offer letter to each one.
A week later, two of the homeowners respond to Laura, and she is able to negotiate a purchase with one of them, which she then passes along to a house flipper for a $10k wholesaling fee.
1. Where To Drive When You’re Driving For Dollars
When you are first getting started, the million-dollar question is, “Where should I drive?”
For starters, don’t overthink it.
It’s better for you to just get out there and start driving than to procrastinate on this for months trying to find the perfect criteria for your driving spots.
That said, here are a few suggestions that will help you get the most bang for your buck.
Target Neighborhoods Based On Home Value
Most real estate deals happen on homes in the $100k-200k range.
That’s not a hard and fast rule, and many investors will actually tell you to focus on luxury homes, but these can be a bit riskier if you don’t have the capital to sit on a home for awhile.
Most importantly, a typical new investor is going to be the most comfortable working on homes in that $100k-200k range, so that’s why we recommend that you start your driving for dollars search at this price range.
It’s also more likely that you are going to find vacant and distressed homes in these types of neighborhoods. At higher values, fewer and fewer people can afford to leave homes lying about, but in a neighborhood averaging $100k per home, distressed homes can be worth as little as $30k, and are more likely to be a low priority holding that some owner several states away just hasn’t gotten to.
If you want to get more specific, you can target neighborhoods where property prices have risen notably over the last few years.
Drive At Low-Traffic Times Of The Day
As a general rule, you should pick a time of day when it’s not too busy to drive through your target neighborhood. This will give you the freedom to take your time looking at houses that fit your search criteria. It will also help you avoid drawing too much attention to yourself.
Keep An Eye Out Whenever You’re Out Driving
Every trip you take in your car is an opportunity to find off-market deals.
All you have to do is keep your eyes peeled for them. Of course for this to work, you must have time to spare en-route to your destination. But the bottom line is that you should view every time you step into your car as an opportunity to get a lead in your pipeline.
Areas to Avoid as You Drive for Dollars
Knowing where to look for your next deal is important - so is knowing which areas to avoid.
Yes, some areas are a waste of time as you’ll rarely get any deals there. There are two areas in particular you should avoid:
High-income neighborhoods. High-income owners are less likely to respond to offers or sell below market value.
Neighbors with a large number of abandoned and distressed homes. The goal of securing deals is to get a distressed home in a good neighborhood. If the whole neighborhood is distressed, you are unlikely to resale at profit.
In other words, don’t go too high in price and don’t go too low in price. Average, middle-of-the-road neighborhoods are where you want to be.
Recruit “Bird Dogs”
Bird dogs, in real estate, simply mean people who are frequently in the area you’re targeting. These are people like mailmen or delivery personnel.
Give bird dogs your card and offer them an incentive for letting you know of any abandoned or distressed properties they come across. This may be in the neighborhood you’re currently in or elsewhere.
Doing this enables you to drive for dollars in multiple locations more efficiently, and it’s how most experienced real estate investors use the driving for dollars strategy.
2. How To Identify Vacant And Distressed Homes
Now that you understand where to drive, we’ll cover how to identify vacant and distressed properties.
First off, understand that this isn’t an exact science.
You are simply looking for signs that mean the home is likely to be undervalued.
So what are the tell-tale signs you need to look out for as you drive through a neighborhood looking for your next real estate investment deal?
Here are a few to consider:
An unkempt yard (tall grass, leaves and litter scattered all over, etc)
Absence of curtains in the windows
Doors/windows boarded up
Newspapers, flyers, and other papers piled up on the front porch
Mailbox full of old mail
Foreclosure or code violation stickers on the front door
Missing electric meter
Peeling paint, falling gutters, and other visible signs of neglect
Locked gas meter
Signs of vandalism
No sign of personal items like a garden hose, porch furniture, etc
Some of these will be harder to spot initially, with a little bit of practice, you’ll be able to see them from a mile away.
An important point to note as you drive for dollars is that you need to avoid houses that have been foreclosed on or listed with real estate agents.
When a home hits foreclosure or has been added to the MLS, it is no longer “off market” and you are now going to be competing against the market to purchase the home, meaning you are unlikely to get a good deal.
Helpful Tools While Driving For Dollars
Driving for dollars requires a bit of legwork.
It’s not difficult but that doesn’t mean you won’t want some tools around to make it a bit easier on yourself.
Here are the tools we recommend:
A good camera. Of course, a good smartphone will do just fine. Taking photos of properties that you’re interested in will help you remember them better. It will also help you estimate how much work will be needed to revive the property. Be sure to take photos of the neighborhood/location as well.
Notebook and pen. Jot down as much information about the property as you can. This includes the address and contact details of the owner (if you can get them from the neighbors).
Driving for dollars apps. Technological advancements have made life easier in many areas, yes, including driving for dollars. Apps like Propelio, Driving for Dollars App, or Deal Dog from Connected Investors can help you take the grunt work out of many driving for dollars tasks. These are tasks such as skip-tracing, storing leads, and knowing which parts of the neighborhood you’ve already covered among a host of others.
A map. Yes, it may sound old school but a map is a great tool to have as it will help you be strategic in your driving for dollars approach. A map enables you to conduct a strategic grid search as opposed to randomly driving around a neighborhood.
Envelopes. It’s good practice to leave a note to the homeowner on a house that catches your fancy. This is where a stack of envelopes comes in handy.
So far we’ve covered which neighborhoods to target, how to spot the right homes, and which tools to use along the way.
Now it’s time to go find the homeowner’s information, so you can send them your offer.
3. How To Find Homeowner Information
By this time you’ve probably found a couple of properties that have the potential to turn into a great deal.
What do you do next?
Well, if it’s a distressed house but with the owner living in it, you can simply knock on the door and pitch your offer... OR send a letter to the actual home address.
But how do you find information on the owner if they don't actually live there?
What do you do if the property you’re interested in is vacant?
There are two ways this can go.
The easy way.
And the “time to be a detective now” way.
Let’s start with the easy way.
Dig Through These 2 Public County Records
Your county will have homeowner records via a number of databases, including:
Property Deed Records
Tax Assessor Records
In some cases, you might be able to access these records online. In many cases, you will need to go to your county courthouse to access them and/or make copies.
Like with most aspects of driving for dollars, this requires a bit of legwork but once you've done it a few times, it's relatively simple to do and won't take you a long time.
While you are primarily looking for the owner’s name and mailing address, you’ll also get valuable information such as:
The year the house was built
When it was sold last and what it sold for
What its tax value is
Whether or not it’s going into foreclosure
This method is the "easy" way and will produce results for most homes.
In some cases, however, the information might not be accurate or it might not connect you to the true homeowner.
For example, if the home title is held via a trust, you won't immediately be able to see who the homeowner is.
From here, you have to decide whether to cut your losses and focus on the homeowners you could find via the county records or to put on your Sherlock hat and begin investigating further to get in touch with the additional homeowners.
As a general rule, we'd recommend only going down the investigation path if the home seems like a really good potentially deal - aka the only run down house in a very solid neighborhood.
If you decide to investigate further, you can use the following strategies.
Ask The Neighbors
It's no usual for the neighbors of a vacant home to know the owners. In many cases, you can get the homeowners information directly from one of the surrounding houses.
Simply knock on the doors and let them know you are wanting to purchase and renovate the eyesore home nextdoor.
Just be careful and aware of your own personal safety when doing this. You never know what types of people you might run into.
Search Additional Records
There are a lot more records that can be searched if you really want to find a homeowner, including:
Corporate records; and
Many other public records.
Again, digging through these will require a bit of legwork, but if you want the deal bad enough, it's an option.
4. How To Reach Out To Homeowners And Secure A Deal
Once you’ve obtained the addresses of the homeowners, the next step is simple - send them a personalized note stating your intentions.
Make sure to let them know that you want to buy the property in an “as is” condition, that you will pay cash, and that you are looking to make a deal fast. These will all be positives to the right buyers, and you don't want to waste time on the wrong buyers.
The following tips are generally considered to be best practices as well:
Personalize your letter. You can do this in many ways such as including a photo of the property or writing the letter by hand among others.
Prove you’re genuine. Include an example or 2 of happy property owners you’ve worked with before. This will help foster trust and the fact that you’ll give them a good deal.
Push, but don’t shove. Gently nudge the property owner into responding by including a sense of urgency in the letter.
When the homeowner responds, be prepared with a few questions to ask about the property.
Examples of questions to ask include:
Is there a mortgage on the property?
If there’s a mortgage on the property, how much do they owe on it?
Are there any special reasons the property was abandoned?
How much would they want for the property?
Can you see the interior?
How quickly would they like to sell?
This information will help you crunch the numbers and determine your Maximum Allowable Offer (MAO) aka the maximum amount you can offer them for the home.
Keep in mind that they may not respond to your initial letter.
You'll need to be persistent and send continued outreach until you get either a "yes" or a "no" response. Most experienced real estate investors recommend reaching out once every 3 months.
Pros & Cons Of Driving For Dollars
Driving for dollars is a solid strategy for finding off-market real estate deals that can be used by both beginners and experienced investors alike.
Like with most deal finding strategies, it has its pros and its cons.
Here's what makes driving for dollars an attractive strategy:
Cost-effective way of finding real estate deals. One of the biggest advantages of driving for dollars is that it doesn’t require much in terms of investment. All you need is fuel for the drive and a bit of stationery.
Gives you a better picture of the property you’re investing in. Seeing the property you plan on investing in gives you a better picture of the work needed to be put in it. It also helps you have an idea of the type of ROI to expect.
Gives you a feel of the neighborhood. This is important as it helps you easily match the property you’re looking at to the criteria you and your buyers have set.
Has less competition. Most real estate investors look for deals in the same places and usually get information from the same networks. Driving for dollars helps you tap into a market that is virtually untouched, thereby giving you an edge.
But of course, it also has its drawbacks:
Time-consuming - Driving for dollars is a time-consuming endeavor that can eat up your time at every stage of the process.
Lots of legwork - In a space with increasingly sophisticated technology, driving for dollars is more of an old school, legwork-driven strategy that doesn't allow you to cut corners.
Not scalable - while it's theoretically possible to scale this strategy a bit via an extensive bird dog network, bird dog recruiting can be very hit or miss, and driving for dollars doesn't have the same scaling potential as other lead-gen strategies.
As we mentioned before, if you have more time than money, and you want an accessible, reliable way to begin finding real estate investing deals, driving for dollars is for you.
How To Find 50-80 Deals Per Month
If your goal is to make a little cash on the side, driving for dollars has everything you need to get started.
On the other hand, if you are getting into real estate to change your life and hit income levels most people will only dream about, you are going to need a more aggressive, more scalable strategy for finding and executing real estate deals.
This type of strategy isn't for everyone, but if you consider yourself a uniquely ambitious person, then click below to learn how Astroflipping's founder averages more than 50 deals per month (as high as 80 in a single month).
This isn't theory or speculation. This is the exact process Josiah Grimes used to built the #3 biggest wholesaling firm in the US.