10 Ways I Find Cheap Houses

TLDR

I laid out ten channels I had used to find cheap houses. The easier a channel is to access, the more demand it tends to attract and the more price pressure you may face. Pick two or three channels that fit your skills, test them in your market, and go deep on the ones producing real opportunities now.

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

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.

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 strategic. This is the one that works most of the time. Say a below-median house that needs work is listed at $150,000. In my example, the market median was about $320,000. 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 strategic 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, puts it under contract, then may assign that contract to an investor like you for a fee. The seller gets the contracted price, the wholesaler gets the disclosed assignment spread, and you get the contractual rights the wholesaler can legally transfer. State rules about wholesaling, assignments, advertising, disclosure, and licensing vary, so verify the current rules where you operate.

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, owners with more than three houses, and people who bought within the last few years, 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. One or two of those might 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 lender has started a foreclosure process, but the sale has not happened yet. A purchase from the owner or a lender-approved short sale may still be possible, depending on the loan, title, deadlines, and state law. I’m in Tennessee, which uses a non-judicial process for many foreclosures. A judicial process runs through the courts. Do not use this summary as a deadline or authority to contact, contract for, or buy a specific property.

Foreclosure auction. The courthouse-steps deal. In my example, a $120,000 loan plus $5,000 in trustee fees produced a $125,000 opening bid, and I described bidding one dollar more when no one else bid. That was an illustration, not an auction rule. The actual opening bid, bid increment, payment method, sale terms, liens, title, occupancy, redemption rights, and due-diligence access depend on the property and current law.

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. In the recording, I estimated that delinquency can run three to five years before a tax sale. That timing and the rights sold at auction depend on current local law and the specific sale. In the source example, the opening number is tied to the delinquent taxes and a house might sell for about $30,000.

The catch on tax sales is the redemption period. In the recording, I said I believed my Tennessee example was about a year. The actual period, amount required, possession rights, and title process depend on the sale and current law. The former owner may be able to redeem during that window, which can tie up the bidder’s money and put the property at risk of being returned. Some investors use redemption hacking to partner with former owners and split the upside. I don’t do tax sales for that reason. I like channels I can more directly 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

These were ten functional channels when I recorded the lesson. That does not mean every channel is equally available or productive in every market today. You are not going to run all ten on day one. Spreading effort across ten channels means you do ten things poorly.

Pick a couple and focus. Direct mail, wholesaler relationships, deliberate MLS offers, and agent relationships are all channels covered in the source, but the source does not rank one universal beginner sequence. Choose channels you can work consistently, learn what produces real conversations in your market, and deepen those before spreading across all ten.

FAQ

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

The source does not prescribe one first channel. Pick a couple of channels you can work consistently and measure what produces real opportunities.

Are all ten of these still working in this market?

In the recording, I said all ten still worked and that sellers had become more flexible as buyer demand slowed. That describes the market I was seeing then, not a current guarantee. Check recent local listings, auction rules and results, response data, and completed purchases before deciding which channels work in your market now.

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 costs you the list and marketing instead. Same deal, different margin. The wholesaler’s fee used to be ten grand. Now I often see thirty to forty grand. That’s enough money to justify running your own mail program.

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

I mail monthly. Depending on the format, the example in the source runs from about 60 cents for a postcard to $1.50 for a piece of mail. One recent drop produced six calls, with one or two that might become deals. That is one result, not a promised response rate.

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

A redemption period is a post-sale window in which a former owner may be able to reclaim the property by paying the amount current law requires. I estimated about a year for my Tennessee example in the recording, not a deadline to use on a real sale. Confirm the exact auction, title, possession, and redemption rules with a local title professional and attorney before bidding or improving the property.