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When not buying a turnkey property direct from a professional company, someone who is interested in the purchase of a rental will have to perform all legwork to locate a property. Not every deal is marketed through national home listings or through advertisements. Knowing what are pocket listings could be valuable to an investor who is motivated to make a purchase.
Pocket Listings Defined
Listings that are not really advertised publicly are known as a pocket listing. These are controlled by brokers who have assembled their own list of people who buy homes. These listings are generally referred to as off market because they are not accessible to the average investment property buyer in the U.S.
How a Pocket Listing is Acquired
A broker will likely have a team in place who searches for property deals on a regular basis. Owners of homes are often contacted by mail or in person to find out if they are willing to sell at a certain price. FSBO or for sale by owner properties are most often targeted by brokers who are building up pocket listings in real estate.
Can You Buy Pocket Listings?
The average investor will need a relationship with a local or national broker in order to be added to their hot list of buyers. There are ways that someone can get on these exclusive lists although it can be difficult.
Ways to find brokers include:
1. Review Broker Listings on MLS
2. Make Calls to Brokerage Firms
3. Network at Real Estate Events
Pocket Listings Versus Turnkey Homes
While getting a lower than market deal is possible as an investor, not every broker is willing to cut into their own profits. Deals can be slim if an investor does not have an open relationship with a team of brokers who actively obtain homes under contract. One downside to a pocket listing is that all homes are sold as is and might require renovations at the time of purchase.
Advantages of a Turnkey Rental
A turnkey home is usually the best investment for a person who has zero experience owning or managing a rental. Because the homes have already been upgraded and furnished, there are typically no additional expenses for investors. The market prices for an investment property that is listed as a turnkey home are often much lower compared with a new construction property that will be used as a direct rental.