I use everything under the sun. I have two realtors, our local mls website (available to everyone), www.loopnet.com
(the free portion), www.bidselect.com
. I check these sites a few times a day for anything interesting i.e. foreclosures, sellers looking to get out, etc. If I find something I like I fax a contract to lock the property up and get it inspected to see if it will make a profit.
Not really hard to find bargains you just have to be persistant and patient. Set your minimum required rate of return or profit and keep looking. We don't look to make a killing off of each rehab (like on these tv shows) just enough to make it worthwhile. If we make 15k per rehab we're doing good especially considering our living expenses are less than 30k in Panama. The rest goes into retirement accounts (and taxes).
To do these deals we pulled out some equity in our rentals and use that money to buy the rehabs (downpayment, repairs and closing costs, and holding costs). As far as taxes are concerned we use the depreciation allowed on the rentals to offset the gains in the rehabs. That is why it is important to have both in your portfolio. The rehabs provide the "juice" while the rentals provide a steady income and tax writeoffs.