Ep 10: How Driving for Dollars Finds Iowa Flip Deals First

How Driving for Dollars Finds Iowa Flip Deals First

 

[NEIL] Four to five hundred houses in an afternoon. Notebook, a cup of coffee, and a truck. That is how some of my best deals ever showed up, and they never once touched the MLS.

 

[MAGGIE] Four or five hundred houses. In one afternoon.

 

[NEIL] One neighborhood, one Saturday. We will get into the math.

 

[NEIL] Welcome back to Flipping Iowa. I'm Neil Timmins, I'm a real estate investor, and I'm Iowa's hard money lender.

 

[MAGGIE] And I'm Maggie. I went deep on this one for the blog this week at littleguyloans.com, and by the time I finished writing it, I realized how much of it I actually didn't understand until I dug in. It's about finding deals nobody else has found yet.

 

[NEIL] Driving for dollars.

 

[MAGGIE] Right, and I want to start with the obvious question. Every investor I talk to is checking Zillow, checking the MLS, following the same wholesaler lists as everyone else. Why would anyone go drive around a neighborhood instead of just refreshing a website?

 

[NEIL] Because that website is the most crowded place in the entire business. Every investor in the metro is looking at the same twelve listings that hit this week. You are not finding an edge there. You are fighting for scraps with a hundred other people who saw the same email alert you did.

 

[MAGGIE] So the edge is literally driving past a house before anyone else knows it is available.

 

[NEIL] That is exactly it. If a property has not been listed anywhere, there is no bidding war. There is no other investor. There is just you and a seller having a conversation. And that is where the actual margin lives in this business. Not in negotiating a listed property down five thousand dollars. In finding the one nobody else even knows is in play.

 

[MAGGIE] Okay, so walk me through it. If I wanted to try this in the Des Moines metro this weekend, where would I even start?

 

[NEIL] You do not start by driving the whole metro hoping something jumps out at you. You pick one neighborhood and you go deep on it. I like older housing stock. Original windows, aging roofs, decades of deferred maintenance. That stuff throws off signals a newer subdivision just does not have.

 

[MAGGIE] Give me an actual neighborhood.

 

[NEIL] Beaverdale is the one I point people to first. Nineteen thirties and nineteen forties bungalows, a mix of folks who have owned their house forty years and heirs who inherited a place they never wanted. Altoona and Indianola work the same way, just smaller. Older core, newer subdivisions around the edges that are not worth your gas money.

 

[MAGGIE] So what am I actually looking for once I am driving? Because I imagine most houses just look like houses.

 

[NEIL] You are not looking for run-down. You are looking for a property that has become a problem for whoever owns it. Landscaping that has been dead more than one season. A blue tarp that has been on the roof long enough that it is faded. Mail piling up on the porch. A code violation notice taped to the door. A porch that is visibly sagging.

 

[MAGGIE] And one of those doesn't mean much on its own.

 

[NEIL] Correct, one sign, could be nothing, maybe the owner is traveling. Two or three of those on the same house, now you have got something worth writing down.

 

[MAGGIE] So you are literally writing addresses down as you drive.

 

[NEIL] Address, a quick note on condition, a photo if I can get one, and if the county assessor site has an owner name, I grab that too. I keep it simple on purpose. A list that lives in your head is a list you lose two streets later.

 

[MAGGIE] How much ground are you actually covering in one of these sessions? Because "drive around a neighborhood" sounds pretty loose to me.

 

[NEIL] It is not loose at all, that is the mistake people make. I map the neighborhood in a grid before I ever start the truck, so I cover every street exactly once instead of the same three streets four times because they felt familiar. Two to three hours, four to five hundred addresses, and I call it done for the week.

 

[MAGGIE] And out of four or five hundred addresses, how many are actually worth a second look?

 

[NEIL] Handful. Maybe eight, maybe fifteen depending on the neighborhood. That ratio is normal, and if you go in expecting every third house to be a deal, you are going to quit after week two.

 

[MAGGIE] So then what? You knock on the door?

 

[NEIL] Almost never, at least not first. A handwritten-style mailer works better than anything slick. Something that reads like a person sent it, not a company. And here is the part almost everybody skips: you follow up. Thirty days later if you have not heard anything. Owners of distressed property are usually not in a hurry, so your follow-up should not act like it is either.

 

[MAGGIE] What happens when someone actually calls you back?

 

[NEIL] You run the numbers exactly like you would on any deal that came through an agent. You comp it against recent sales in that same pocket of the neighborhood, not a metro-wide average, because a metro average will lie to you about what a specific block is actually worth. You hold your after repair value number and your rehab estimate steady before you ever talk price with the seller.

 

[MAGGIE] I have to ask, because I think people hear "off-market" and assume the financing side gets complicated. Does anything change once you have actually got one of these under contract?

 

[NEIL] Nothing changes on the financing side at all, and that surprises people. Whether that contract came from a driven mailer, an agent, or a wholesaler, we fund it the same way. Up to ninety percent of the purchase price, up to one hundred percent of your rehab budget covered in draws, and the number that actually runs the whole deal is the after repair value cap, capped at a maximum of seventy percent. That cap is your real ceiling no matter how good the purchase price looked on paper.

 

[MAGGIE] So the sourcing changes, but the underwriting doesn't care where the deal came from.

 

[NEIL] Not one bit. We can turn an approval in twenty-four hours and close in as little as five days once the numbers work, off-market or on. The lending side treats it the same. It is entirely the sourcing side where driving for dollars gives you the edge, because you are the only investor who found that particular house.

 

[MAGGIE] Okay, this makes me think of something. You have told me before about two investors, and I do not think you have ever put a name to it on the show, but you called it the group that "goes direct." Is that the same idea, just at a bigger scale?

 

[NEIL] Same exact idea, just with more channels running at once. Two guys in our portfolio, and honestly, they are two of the most profitable borrowers we have. Neither of them is finding a better deal on the MLS than anyone else. They are finding deals nobody else even sees, because they built a system to get to the seller first.

 

[MAGGIE] What does their system actually look like?

 

[NEIL] Bandit signs, direct mail, texting, calling, all running at the same time, all pointed at the same list. And that is the part people miss when they try to copy it. It is not four separate tactics. It is one list getting hit from four directions.

 

[MAGGIE] You keep saying "the list" like it is the whole thing.

 

[NEIL] It is the whole thing. Not a generic list of every homeowner in a zip code. A specific list of people who have a higher chance of actually being in a spot where they would consider selling. Building that list is real work. It is data, it is time, and it is the exact part most investors skip because dropping a generic mailer on a zip code feels easier.

 

[MAGGIE] And I'm guessing one mailer doesn't do much.

 

[NEIL] One mailer does almost nothing. A seller gets one postcard, it goes straight in the trash. A seller who has gotten something from the same name six times over eight months, and then their situation actually changes, a job transfer, a death in the family, whatever it is, they remember that name. Consistency on a targeted list over time is the entire formula.

 

[MAGGIE] And they track all of it.

 

[NEIL] Down to the dollar. They know exactly what each channel costs them, what their response rate is, what percentage of contacts actually turn into a signed contract. When you know those numbers, you put more money behind what is working and you cut what is not. Most investors are just spending and hoping, and hope is not a strategy.

 

[MAGGIE] So driving for dollars is basically the entry-level version of what these two guys are doing at scale.

 

[NEIL] That is exactly right. Same principle, smaller footprint. You do not need bandit signs and a database and four channels running simultaneously to start. You need a truck, a Saturday morning, and the discipline to actually build the list instead of hoping a good deal falls in your lap.

 

[MAGGIE] Let me push back a little here, because I think some of our listeners are going to hear "two to three hours a week driving around" and think, isn't my time worth more than that? Couldn't I just buy a list instead?

 

[NEIL] You could buy a list, sure, and plenty of investors do both. But a purchased list is the same list every other investor in the state can buy. What you find with your own eyes driving your own route, nobody else has that. And honestly, the time cost is smaller than people think. Two to three hours a week is one missed college football game. If it produces one deal a quarter that never touched the open market, that is not a bad trade.

 

[MAGGIE] What about someone who says, I don't have time to build a spreadsheet and track owner names off the assessor site?

 

[NEIL] Then start smaller than you think you need to. Pick one street. Ten houses. A notebook, not a spreadsheet. The system can get sophisticated later. What kills people is trying to build the full version on day one and giving up in week two because it felt like too much.

 

[MAGGIE] So the message is start narrow, and let it grow.

 

[NEIL] Start narrow, stay consistent, and do not judge it after one drive. This is a pipeline you build over months, not a lottery ticket you buy on a Saturday.

 

[MAGGIE] Before we close out, you know we like to end the show with a piece of Iowa history, so here is this one. It actually made me think about rehab timelines a little differently.

 

[NEIL] Go for it.

 

[MAGGIE] On August twenty-fourth, eighteen fourteen, British troops marched into Washington and set the White House on fire. Dolley Madison was already headed out the door, but she stopped just long enough to grab the full-length portrait of George Washington before the whole place went up in flames.

 

[NEIL] She saved a painting on her way out of a burning building. That is a level of composure I do not think I have.

 

[MAGGIE] It gets better, or worse, depending how you look at it. James Madison never moved back in. He finished out his entire term somewhere else. It took three full years of rebuilding before James Monroe finally walked back through the door, in eighteen seventeen.

 

[NEIL] Three years. Next time a rehab runs six weeks past schedule because a contractor is waiting on a permit, I am going to remember that the President of the United States waited three years to get his house back.

 

[MAGGIE] Puts a slipping punch list in perspective.

 

[NEIL] It really does.

 

[MAGGIE] Alright, let's wrap it up. If you take one thing from this episode, it's that the money in this business gets made before you ever pick up a hammer, it gets made in how you find the deal in the first place.

 

[NEIL] Pick one neighborhood. Beaverdale, Altoona, Indianola, wherever your version of that is. Drive it in a grid, not a wander, and actually write down what you see.

 

[MAGGIE] And build the list before you worry about the mailer. The list is the asset. Everything else is just execution around it.

 

[NEIL] That's the whole episode right there. Thanks for spending this time with us.

 

[MAGGIE] If you got something out of this one, share it with a friend, and be sure to subscribe so you don't miss the next one. Catch you on the next episode.