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I would strongly suggest that anyone looking to amass a portfolio of finacially distressed properties have a cash war chest from which to operate. Getting financing now for any real estate portfolios is not going to be easy.The chances are above average that you will get stuck with non performing assets as well.
As always look for the best value and remember location...location...location. Check out the property tax valuations online for your tax district.
As far as auctions go....you have to have proof that you will be able to pay for the property. Look for shill bidding by two people that may have already made a deal prior to the auction.
Once again great answer from DomainDiva. My question is what do you plan to do with these foreclose properties? As someone who is in the business, the notion of flipping isn't as attractive as it use to be in most markets. However that doesn't mean you can't make money from flipping it is just such a big buyers market in most of the country that people aren't striking gold flipping houses the way they were 4 or 5 years ago.
For me I have had to concentrate on my core business which is the rental market. I buy foreclosed homes but usually in markets with a high concentration of renters or potential renters and movers. Now seems to be a very good time to buy and rent. As DomainDiva said in her post access to credit is getting harder for many borrowers, so you likely to have individuals with shaky credit, renting instead of getting those creative ARM's, thus increasing the market need for properties to rent rather than properties to sell.
BDS is right...make a decision as to what segment of the real market and what you want to accomplish. Whatever you decide you need money and if you borrow...you need money to service the debt...a lot of money to service the debt.
Real Estate auctions are risky business if you are just starting out. Often times you cannot view the property prior to the auction or you can only view the property once - meaning no inspections. If you do go to the auction, you essentially need the cash there (usually you have 24 hours to produce the sales price). If you are just starting out, I would suggest looking into REO (Real Estate Owned) properties. These are properties the banks have bought back at auction and have cleaned up any tax liens or things of that nature. A good real estate agent should be able to help you find these properties.
As far as flipping vs. renting, the other posts are right. You need to do what the market tells you. Right now, with cash so hard to come by and consumer fears of a recession, renting seems to be the way to go. There is so much fear because of all the ARMs, 100% financing and interest only loans that people are much more comfortable renting, even though they aren't building equity, or cannot get financing at all.
Cash flow is what you are looking at when buying and renting properties. Unless you have a ton of extra cash sitting around (like pensions and insurance companies) and are looking for long-term appreciation or tax-benefits, cash flow is why you buy and rent properties. Make sure the rents you can collect will cover all you expenses (Principal, Interest, Insurance, Assessments, Taxes, Escrows, Misc Repairs). If the rents don't cover these expenses, you should consider other properties or areas.
The most important thing before venturing into any type of real estate investment is doing your due diligence. If you aren't confident on the amount of rent you can charge, that the area has a stable job market and has seen steady appreciation/growth, that the building/house/unit is in good condition, that the area is safe etc, you should not buy. Spending $500.00 on a title report, exploring the area, setting up a pro-forma for the property, speaking with a tax professional etc. will potentially save you thousands down the road.
Hope this helps some and feel free to let me know if you have any other questions.
I'm interested in buying a forclosure home, cash, up to 400K ( To live in) and looking for "How\where to locate them". can anyone provide guidance as to:
What website to locate.
What banks to contact
I travel for work so only need to be (45 mile) radius of airport.
Ft. Myers\Cape Coral
You should find a good realtor in your area - they'll likely be able to tell you about listings about to go into foreclosure.
Realtytrac.com is a site that specializes in listing foreclosed or pre-foreclosure properties. I have never used or even really looked on the site for anything so I don't know how accurate the info is. I think you have to register and give them a CC# to get the free 7-day trial. Contact a few real estate agents in your area/the area you are looking at. Searching through MLS you should be able to find some places.
I am a REO Foreclosure Broker in NJ and do a fairly brisk amount of REO & Short Sale business. Especially these days. If you are looking for an active source of REO properties without seeking an inexperienced Realtor, go to reotrans.com. This is where my lending clients (GMAC-Homecomings, Countrywide, Citi, BofA, & etc) have me list my properties through. It is our transaction management system that tracks our listed assets from the very beginning (pre-listing) to close of escrow. It doubles as a searchable database for buyers to search through our (mine & other REO Brokers) inventory. These are fresh results and you dont have to worry about the listings being old. PM or post here with any questions, I would love to help.
Hey Lucky just reading some old post, and came along this one. Yes, you can make money on forclosed properties, but you got to be real cautious, most forclosed property is as-is. If you go to a forclosure auction you have to watch the aboved mention, and then have a short time to have all the cash, or the financing. All states are different, so it's best to check your state. REO (banked owned) properties have already went through the auction, but you still have the problem of as-is, but you have more time to bring in an inspector, and find financing for it. You got to know what you are doing, especially with today's market, but you can still make good money at it. The state I live in real estate went up 4.2% last year, and not hit as bad as rest of the nation. Hope this helps Warren
Before buying foreclosed properties buyers should take the time to learn about the lien laws in their state.
Here in Texas some foreclosed properties are auctioned on the steps of the county courthouse. However the purchaser at that type of auction has no assurance that the property is not subject to other liens. So you could by the property that is being auctioned by the bank on the courthouse steps and later find out that there is an additonal lien for unpaid property taxes that still has to be settled.
These laws vary greatly from state to state. It's very important that a buyer understand their local laws before proceeding.