10 Ways I Find Cheap Houses (And Why They All Still Work)

TLDR

There are ten ways to find cheap houses and all ten still work. The easier a channel is to access, the more demand, and the higher the price. Pick two or three channels that fit your skills, go deep, and ignore the gurus who say the old playbook is dead.

Table of Contents

• The Rule Behind Every Channel
• Buying Off the MLS
• Pocket Listings and PM Company Deals
• For Sale By Owner
• Wholesalers and Becoming Your Own
• Pre-Foreclosure, Auction, REO, and Tax Sales
• Pick Two, Go Deep
• FAQ
• Related

The Rule Behind Every Channel

I’ve been investing in real estate for fifteen years. I’ve bought hundreds of houses. The one thing that ties every acquisition channel together is this: the easier it is to find a house, the higher the price.

That is supply and demand. The MLS is open to anyone with a phone. Zillow has no gatekeeper. Lazy buyers can find those houses, which means more demand, which means the price gets pushed to the top. Go to a harder-to-access channel and the crowd thins out. The price drops. Your margin appears.

Every one of the ten channels below works. I’ve used all of them. Some are better than others, which I’ll tell you, but the idea that “that strategy is dead” is something losers say to explain why they gave up. Fortune favors the persistent.

Skills make you unafraid of what scares other people. That fear is where the deal lives.

Buying Off the MLS

The MLS is the hardest channel to find a deal on because every buyer in town can see it. But deals do show up there, especially right now when the market is in gridlock and sellers are getting antsy. Three angles work on the MLS.

Be the fastest. Watch the feed constantly. When something pops up, go look at it that day and put in an offer before the crowd sees it. The seller has a choice: hold out for a maybe, or take the bird in hand. Sometimes they take the bird.

Be the slowest. Find a house that’s been listed 150, 200 days, way beyond the normal days on market. Everyone else is looking at it and assuming something is wrong. Something usually is. Maybe it needs a big renovation. Maybe it has structural issues. Maybe it just looks ugly in the photos. The seller is biting their nails at that point. Come in low and see what happens.

Be deliberate. This is the one that works most of the time. Say a house is listed at $150,000. Give the lowest offer you think they’ll actually accept. Offer $135,000, meet in the middle at $140,000, you’re under contract.

Next comes the inspection. An inspector’s job is to find things wrong, and if they handed out clean reports nobody would hire them again. You take that list back to the seller and say, “Based on what came up, I can’t do $140K. I’ll do $125K.” The seller has already mentally spent the money and counters at $130K. You take it.

If you’re paying cash you can run a similar play up front. “I’ll pay $120K, no inspection, no appraisal, close in ten days.” The seller imagines the house off their books by the end of next week, and some of them take it.

Dumb Mistake

The line between deliberate and shady is what you could see before the inspection. Old windows, old roof, ugly cabinets: those are visible at the walkthrough and should already be in your offer. Trying to renegotiate for things you obviously saw going in makes sellers hate you and kills repeat deal flow with their agent. Renegotiate on the stuff the inspector surfaces, not on what you already priced in.

Pocket Listings and PM Company Deals

A pocket listing is a house an agent knows is coming but hasn’t put on the MLS yet. Commission math favors the agent when they bring both sides.

On a $200,000 house with a 6% commission, the total fee is $12,000. If the listing agent also finds the buyer, the brokerage keeps the full $12,000 and the agent at an 80/20 split walks with $9,600. If someone else brings the buyer, the agent’s share drops to about $4,800. That gap is why agents love buyers who can move without a public listing.

The play: build real relationships with a handful of agents. Tell them what you buy, how fast you close, and how clean your offers are. When one of their sellers is ready but hasn’t hit the MLS, you’re the first call.

A property management company is the same game with a different wrapper. PM companies broker sales for their own investor clients. Those houses usually have tenants in them, and scheduling showings around tenants is a pain. The buyer who takes it without a showing parade is worth more than the buyer who pays list price. We own a PM company that manages over a thousand doors, so I see this flow from the inside. Build the same relationships with PM brokers in your town.

The person who can buy without a showing parade is worth more than the person who pays the highest list price.

For Sale By Owner

A for sale by owner is someone who chose not to hire a brokerage. They listed on Zillow themselves, put a sign in the yard, or paid a flat fee to a service that routes calls straight to them.

The flat-fee version is a loophole. You can list yourself on the MLS for a few hundred bucks through certain brokerages. Agents leave voicemails on an automated line that forward to the owner. It looks like a real MLS listing, but you’re dealing direct.

The value of FSBO is a real negotiation. No agent in the middle filtering your offer. No 6% off the top. You can get creative on terms, closing timeline, repairs, and seller financing in a way that doesn’t happen when two agents are hovering.

The downside is follow-up. FSBO sellers can be slow, flaky, emotional about the house, or unrealistic on price. You have to stay on it. Every channel looks broken until it isn’t, and FSBO is one of those where persistence pays.

Wholesalers and Becoming Your Own

Now you cross the line into true off-market.

A wholesaler finds a house direct from a seller, locks it up under contract, then assigns that contract to an investor like you for a fee. The seller gets their number, the wholesaler gets a finder’s fee, and you get a house that never hit the open market.

The problem is that wholesaler fees have ballooned. I remember when a $10,000 assignment was standard. Now I see $30K, $40K, and on one 12-unit apartment building I paid a wholesaler $100,000 on a single deal. The math still worked for me, but writing that check does not sit well.

Two moves get you better wholesaler deals:

1. Compile the full list of wholesalers in your market. They’re easy to find. They advertise in local Facebook groups, at your local RIA meetings, and they mail you the moment you own a house or two. Put every one of them on a list.
2. Target the new ones. A wholesaler with a huge buyer list has just as much demand as the MLS. A new wholesaler has three buyers in their phone. Become their best friend and their best buyer, and you’ll see the deals first, before the fee structure hardens.

The next step is cutting the wholesaler out entirely and going direct to seller yourself. Here is how I do it.

Build the list. I buy a list filtered three ways.

Start with the buy box. In my market that filter alone is 70,000 houses. Then I strip out LLCs, out-of-state investors, and recent buyers, and it drops to around 30,000. From there I run thirteen separate pain-point pulls. Tax delinquency might be 800 records. Probate might be ten. All thirteen lists combined come out to about 2,300 sellers.

Hit the list. I mail every month. Postcards run about 60 cents each. Handwritten letters run more but pull better on some lists. You can also cold call, cold text, cold email, and door knock. Each channel has legal rules, especially cold calling and texting, so follow them. A recent mail drop got me six calls. Out of six calls, one or two turn into deals. That math works.

Pro Tip

Pain-point filtering is the whole game. A random mailer to 30,000 homeowners is a lottery ticket. A mailer to 800 tax-delinquent homeowners who match your buy box is a conversation with people who actually need to sell. Spend time on the filter, not on the postcard design.

Pre-Foreclosure, Auction, REO, and Tax Sales

These are the distressed channels. All four involve a lender or a government entity that wants to stop losing money on a property, which makes them motivated in a way a normal seller never is.

Pre-foreclosure. The owner has stopped paying the mortgage and the lender has started the foreclosure process, but the auction hasn’t happened yet. You can still buy directly from the owner. Sometimes a short sale fits here, where the lender agrees to accept less than they’re owed. Rules vary by state. I’m in Tennessee, which is a non-judicial foreclosure state, so my experience is cleaner than what you’d see in a judicial state where a judge has to sign off on the whole thing.

Foreclosure auction. The courthouse-steps deal. The lender sets an opening bid based on what they’re owed plus trustee fees. On a $120,000 loan with $5,000 in fees, the opening bid is usually $125,000. If nobody else bids, you can buy it for $125,001. Sometimes the lender opens lower, hoping for a bidding war. Banks don’t want to own real estate, so the math is often on your side if you’re the only one showing up with cashier’s checks.

REO. Real estate owned. When the bank wins the auction and keeps the house, it becomes an REO. Most banks hand these to a real estate agent who lists them like any other MLS property. Some smaller banks have no idea what to do with them. The first house I ever bought was an REO right after the 2008 crash. A better deal I did was three houses from a small bank that won its own auction and had no idea how to price them. They were worth about $250,000 combined. I paid $70,000.

Tax sales. The government auctions a property when the owner hasn’t paid property taxes, usually after three to five years of delinquency. The government does not care about profit, so the opening number is usually just the back taxes. You can pick up a house for $30,000 that’s worth $150,000.

The catch on tax sales is the redemption period. In Tennessee it’s about a year. The original owner can come back during that window, pay the sale price, and take the house back from you. Your money is tied up for a year and you might end up with nothing. Some investors use redemption hacking to partner with the original owners and split the upside. I don’t do tax sales for that reason. I like channels I can fully control.

Key Concept

My whole approach comes down to knowledge plus experience equals skills, and skills make you unstoppable. I pick channels where my skills decide the outcome. A tax sale where someone else can redeem for twelve months is outside my control. I’d rather work the nine channels where I own the variables.

Pick Two, Go Deep

Ten channels, all functional, all used by someone right now to buy a cheap house. You are not going to run all ten on day one. Nobody does. Spreading effort across ten channels means you do ten things poorly.

Pick two. Maybe three if you have help. My ranked preference for a solo investor starting out:

1. Direct to seller via mail. Most control, best margin long term, compounds over years.
2. Wholesaler relationships with newer wholesalers. Fast deal flow while you build your own pipeline.
3. MLS deliberate offers on stale listings. Slower but works with no marketing spend.
4. Pocket listings with two or three agents you trust. Requires real relationships, not a cold email blast.

Build one of those into a machine before you touch the rest. Then add. Focus always wins.

FAQ

I’m brand new. Which channel should I start with?

MLS deliberate offers. You need no list, no relationships, and no marketing budget to learn how to read a deal, write an offer, and run a walkthrough. Once you’ve done three or four MLS deals you’ll have enough pattern recognition to pick a second channel.

Are all ten of these still working in this market?

Yes. All ten still work. Sellers are getting more flexible right now because fewer buyers are buying, which actually makes MLS offers on stale listings and pre-foreclosure plays easier than they’ve been in years. The people saying “that strategy doesn’t work anymore” are people who stopped trying.

What’s the difference between a wholesaler and an off-market lead I generated myself?

A wholesaler charges you a fee, which is their whole business model. A self-generated off-market lead is free except for your list and marketing cost. Same deal, different margin. The wholesaler’s fee used to be ten grand. Now it’s often thirty to fifty grand. That’s enough money to justify running your own mail program.

How much money do I need for direct-mail marketing?

A starter budget is 500 to 1,000 pieces per month at roughly a dollar each. Run it for six months before you judge it. One deal usually covers a year of mail.

What’s a redemption period and why does it kill tax sales for me?

A redemption period is the time after a tax auction during which the original owner can pay the auction price and take the property back. In my state it’s about a year. Your money is locked up, the property might come right back out of your hands, and you can’t start the renovation with any confidence.