Do you ever wonder how the pros find real estate deals they can turn for a profit?
Truth be told, the best real estate investors are those that model their careers after the conscious consumer. Not surprisingly, that means finding a real estate investment property with a lot of potential. However, the concept of buying low and selling high may not resonate with everyone on the same frequency. Some people, through no fault of their own, find it difficult to uncover properties with a price tag that they can acquire and turn for a profit.
In all honesty, I am not here to tell you how hard it is to find a property. I am, however, here to tell you that there are plenty of properties out there with very attractive price tags and a lot of potential; you just need to know how to find an investment property in today’s environment. Finding the right deal requires a lot of work upfront, but that doesn’t mean you can’t make your job a lot easier by looking for deals in the right places. If you want to learn how to find real estate deals like the pros, I encourage you to keep reading.
If you want to find investment properties like the pros, try shopping in the same locations they do. Remember, there is no need to reinvent the wheel. If they have found success time and time again, there is no reason you couldn’t expect the same. That said, I recommend going to the same well the professionals use. Consider the following sources of deals the next time you are in the market for a home to invest in:
Foreclosures, as I am sure you are aware, are those properties that are in the process of being repossessed by the lending institution that issued the loan as a result of the homeowner’s failure to keep up with mortgage obligations. By all accounts, Wikipedia recognizes foreclosures as “the legal process in which a lender attempts to recover the balance of a loan from a borrower, who has stopped making payments to the lender, by forcing the sale of the asset used as the collateral for the loan.”
The process of foreclosure will vary depending on the state the property is in. However, it is not uncommon for local authorities to issue a Notice of Default after respective homeowners neglect to pay their mortgage after 90 days. In the event a Notice of Default is issued, the foreclosure department should then take control of the loan, where it is then put on record for the public to see. That means savvy investors have a source for identifying potential properties.
Foreclosures have become synonymous with a stigma; people don’t necessarily want to invest in something they have such a little working knowledge about. Not surprisingly, people are scared of what they don’t understand. What’s more, smart investors are fully capable of investing in those properties others are scared of. That’s where the pros gain their advantage. Learn what it takes to acquire a foreclosure and get caught up to speed with the process. The sooner you do so, the sooner you will have access to some of the best deals on the market.
2. Properties For Sale At Auction:
Foreclosures are wildly misunderstood by the general public (even some investors for that matter), and are therefore better left to those familiar with the process. If, by chance, you are not comfortable enough with foreclosures to navigate the process, you may be better off going to auctions to find real estate deals.
While not recognized on the same level as foreclosures, auctions are a great place to find real estate deals, no matter what your level of experience may be. Not unlike foreclosures, however, you should have a good idea of what you are getting into before you even consider finding real estate deals at auction events.
There are essentially two different ways in which a house may end up being auctioned off: either the homeowner has failed to keep current with their mortgage (foreclosure) or they neglected to pay their property taxes. Typically, houses placed on the auction block receive a starting bid of less than or equal to the remaining balance on the mortgage.
I want to make it abundantly clear that auctions are not for the faint of heart; while there are great deals to be had, there is also an inherent degree of risk. Of course the degree of risk is made tolerable by the exceptional deals that may be had, but that doesn’t mean you shouldn’t be prepared. As with any investment, mind due diligence and conduct as much research as you can beforehand. The more you know about a property going into an auction, the better.
It is worth noting that most auctions will require you to pay for any purchases in cash. While there are exceptions to the rule, do not let a nuance such as this prevent you from acquiring a truly great deal; have cash and be ready to use it. But don’t stop there. Every auction is run differently, and it is in your best interest to familiarize yourself with the workings of the one you intend to partake in. Understanding the process will help you land the deal you want without any unnecessary risk.
3. Bank-Owned Properties:
Bank-owned properties, otherwise known as REOs (real estate owned), are a great way to find real estate deals — provided you know what you are getting into. Like everything else on this list, purchasing an REO can ultimately land you a great deal, but it requires a little more effort than simply scanning the local MLS.
As their names suggest, REOs are owned by the bank. That means these properties have either failed to sell at auction or were repossessed after an owner’s failure to pay their mortgage, and are now owned solely by the bank. That said, banks aren’t in the business of holding on to properties and would welcome selling them at a discount if it means they can get any nonperforming loans off their books. Real estate investors familiar with the process of acquiring said properties are therefore likely to find real estate deals well worth their time.
If the bargain wasn’t enough to entice you, it is worth noting that REOs may be some of the safest properties money can buy. Since they are owned by banks, the likelihood of a lien preventing a transaction from closing or maintenance becoming a concern is minimal. What’s more, lending institutions intent on ridding themselves of underperforming assets may be more willing to offer more attractive terms on properties just to get rid of them faster.
If you want to find real estate deals that even the best investors would be jealous of, try looking at the these three sources; you may just come across your best deal yet.