In my last blog I wrote about what homework and research you needed to do after you made your decision as to what type of an investor you want to become, and today you’re going to learn how to find these opportunities.
The first step in finding the right opportunity for you would be to find a good real estate agent to assist you in your search. Tips for finding a good agent; look for one with a great reputation, experience in working with investors and see if they have any special training or special designations that they can obtain.
3 different opportunities you can look for are bank owned properties, short sales, and auctions. Let’s first start with bank owned properties. You will need to act fast; good listings go quickly. Second, keep your eye on the number of days on the market. The longer it sits on the market the more negotiating you have. Remember you’re not negotiating with the owner; you may be dealing with multiple third parties, each with a particular agenda and standardized process to follow. Lastly, remember if a loan is insured by Federal Housing Administration for example, lenders can’t accept less than 88% of its appraised value in the first 30 days.
The second opportunity is a short sale; that is when a lender that services a loan has agreed that the homeowner is at risk of default and allows the home to be sold for less than what is owed. Tips for buying a short sale; look for the remarks that the home has an approved short sale, meaning the realtor had an offer that was acceptable to the bank yet the buyer got impatient and moved on. Keep in mind that short sales may sell as low as 14% under list price. Make sure you know how many loans are owed on the home. It’s common to see two banks on one home; you need to have patience. To get an approved short sale can take several months so if you have time restraints don’t go after them. Lastly, make sure you have an exit strategy out of the sale in case you find a better opportunity.
The last opportunity is an auction. Plan on doing as much homework up front, pull public records and see if you can find the listing ticket when the home was purchased so you have an idea as to what the home has to offer. Be cautious on anyone still living in the home; you may need to evict them. Very rarely can you enter the home before bidding. You need a bank check for the day of the auction; it’s nonrefundable so make sure you have your financing lined up. Lastly, a high majority of these auctions are delayed or canceled and the ones that do go off are usually started at an unrealistic asking price by the bank and it doesn’t sell, so plan on being very patient and very thorough.
My next blog I’m going to talk about flipping a home, what you need to do once you own it, what are hidden expenses you need to be aware of and how to keep the job moving forward.
So what do you think of these blogs? Can I answer any other questions for you? Did I offer enough information for you? Your feedback would be greatly appreciated. As always, if I can be of any help please don’t hesitate to contact me. If you want a list of properties that I think are great opportunities please feel free to contact me.
John Connolly, Vice President
SUCCESS! Real Estate