Data mining technology can be extremely helpful in many ways. One of the biggest ways that you can use data mining to make your life easier is to find new real estate investing opportunities. This is one of the reasons the real estate analytics market size is expected to be worth $13.4 billion by 2024 and the real estate software market size is worth almost as much.
However, if you want to use data mining to find new real estate investing opportunities, then you need to know what to look for. One of the smartest ways to use it is by combining skip tracing and data analytics.
Skip Tracing Helps Real Estate Investors Make the Most of Data Analytics
Today, real estate investors need all the help they can get to stand out in a crowd. Competition is everywhere, from professionals to amateurs, which means that any opportunity that can give someone an edge is worth taking.
This is one of the reasons data analytics is so useful for investors. We talked about how stock investors use data analytics, but it can be just as helpful for real estate investors.
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For years, one of the best ways to do exactly that has been to target off-market properties. If you know that a particular area is up-and-coming and want to establish a foothold, but nobody is ready to sell quite yet, you can always look for something off-market to help get into position. That way, you get to capitalize on a short-term opportunity before anyone else can – while also slowly building your long-term strategy.
This is hardly a new concept, but in recent years, skip tracing has become an invaluable tool in this process.
Skip Tracing and the Journey to Off-Market Success
An off-market property is one where the owner is likely willing to sell but hasn’t yet listed the property publicly. This could happen for a number of reasons. Maybe they aren’t sure where to begin and feel overwhelmed. In other instances, life may be getting in the way, and they’ve gotten too busy. Regardless, the time is right to swoop in and make an offer – provided that you’ve got the best intelligence to work from.
That’s where a technique like skip tracing enters the equation.
How Skip Tracing in Real Estate Works
Skip tracing leverages a wide range of advanced data sources, such as public records, social media, and even specialized databases, to compile a complete profile of a property and its history. This ultimately gives the investor an early indication of the potential for an off-market sale. This is one of the biggest examples of ways that real estate professionals can use big data.
The Process of Skip Tracing to Uncover Off-Market Real Estate
For the sake of example, say your strategy was to go into an area and find properties that meet certain criteria, making them most likely to be off-market in the first place. That might include vacant properties, which are likely to have owners motivated to sell because the property is likely in a state of disrepair from years of neglect. Or, the owner could be absent – meaning the owner may actually live outside the area but still maintain possession of the home for whatever reason.
You would begin your process by gathering as much data as possible about all the properties in an area that fit what you’re looking for. Public records from the local government could include tax assessments and other ownership details that could let you find homes with absentee owners. County tax records are also a great way to find owners who may be behind on payments – thus making them more likely than others to sell.
Your skip-tracing journey would also take you through other data sources like real estate platforms, foreclosure listings, and more. While it’s absolutely possible to wade through all this information yourself and arrive at the same conclusion, it would take a significant amount of time to do so. Modern-day skip tracing tools – particularly those with data analytics, artificial intelligence, and machine learning – can get you the same result far faster, putting you in a position to act just as quickly.
Let’s say you have your eye on a property that isn’t necessarily vacant or distressed but would still represent a great starting point for your long-term strategy. You could use skip tracing services to compile data to see who to contact about finding the owner. This can include, but is certainly not limited to, phone numbers, email addresses, and more. County and state databases will also be invaluable to that end.
Using the information you’ve gathered, you can efficiently track down the owner and contact them directly. This is the perfect way to access untapped opportunities that other less-motivated individuals in your profession might not be willing to take advantage of.
What to Do With the Data You Uncover
Once you’ve identified opportunities, exactly how you take that first step remains to be seen. If you live in the area, you could always stop by and ask to have a conversation. Let the owner know who you are, what you do, and why you’re interested in their property. If the owner is out of the area (or state) entirely, you could always send them a letter and ask them to contact you. Depending on how recent the address is that you found, you might hear something right away. Or, you might not. At that point, you would have to build on the data you’ve already collected and use that person’s name to find them on social media.
Once you’ve established that contact, the rest of the process is not unlike that of a traditional real estate transaction. You can start thinking about your post-purchase strategy. You may have an eye towards flipping the property, or perhaps you want to rent it out. You could even sell it to other investors. Regardless, you’re in a much better position to do so now that skip tracing has proven to be such an invaluable asset.
Turning Insight Into Action
In the end, these are just a few of the best practices and tips you can use for a successful skip-tracing endeavor. But remember, one of the biggest skills you’ll need to rely on to see this process through to a satisfying conclusion comes down to your abilities as an investor.
All this is to say that locating an off-market property is one thing. Coming in with an offer, getting the seller on your side, and completing the transaction will be entirely different. You still need to be a great negotiator. You’ll want to come not with gut instinct or intuition but with data. Make a compelling offer and try to understand the other party’s side so that you can meet somewhere in the middle. This is and always will be the key to a successful negotiation.
If you keep these tactics in mind, you can expand your portfolio with high-potential, off-market properties before you know it. Even if this isn’t part of a larger strategy to enter a particular area and establish your dominance, it’s still a great way to diversify and build upon that which you already have. Plus, you never know the lengths you’ll be able to go once you get a bit of momentum going.
