Finding a bargain property, one that is being sold well-below its
worth or potential worth, is not as easy as riding a bike or watching
T.V. Not that it is that difficult either, but the task of getting a
good deal on an investment property can at times be cumbersome. In the
brief list below, five methods for finding and grabbing that good deal
are explained, and although the descriptive nature of the list is
brief, it will give you just enough to ignite your thought.
1.) Distressed sellers
- When I first began researching the rental property sector for
investing purposes, I constantly came across books that toted the great
benefit of finding distressed sellers; people who are eager to sell due
to personal reasons. I remember thinking to myself "Yeah right, I bet
those people come along once every 10 years." Man was I wrong!
Distressed sellers are everywhere.
A year ago I had a man (who
was trying to straighten out his marriage) that I had bought property
from in the past offer me a property for $69,000.00. I told him that
was too much and passed on the offer. A month ago as I was searching on
the internet for properties, I came across that same property for sale
listed by his realtor. Amazingly, the price was now $46,000.00! He
dropped the price by $23,000.00! After negotiations, I got him down to
$41,750.00 and $650.00 cash at closing........
2.) Vacant Properties
- I have a former co worker who doesn't invest in real estate, but five
years ago purchased what is now a $120,000.00 home in the country for
$43,000.00. How did he do it? He drove around in the country and looked
for homes that had tall grass and a crummy exterior. He then went to
the county courthouse and searched for the owner of the deed
(property). Once he found the owner, he contacted him and made him an
offer. The owner turned out to be a retired farmer who owned the
abandoned property free-and-clear, but didn't have the time, energy, or
reason to fix-up the property. Long story short, the coworker got a
great property for a great price and the farmer got $43,000.00 in cash.
Win-Win is the best!
3.) College Towns - In college towns,
there are often an abundance of rentals and a plentiful stock of
professors and college kids to rent the properties. In these areas,
there are always landlords wanting out of the game for various reasons.
Not only can you get a property that is already a rental, but often you
can buy them with a tenant under lease, lessening the risk of an
upfront vacancy. Usually these properties are priced around their
actual value, but the bargain is the fact that they usually demand a
higher-than-average rent because of the continuous demand for housing.
4.) Foreclosures
- We have all heard about these, so I'll make it short. These are often
bargains, but beware of the following two things: First, the banks that
got burnt on the mortgage often buy these back at ridiculous prices,
leaving you outbid and feeling violated. Secondly, these properties are
always sold "as is," which means you cannot view the inside of the
property before buying it (unless you peek in the windows). Be prepared
for busted plumbing, holes in the walls, and everything worth anything
stripped from the property.
5.) REO (Real Estate Owned) -
REO is real estate owned by banks that have had to foreclose on a
property and then bought it back at the foreclosure auction. These
properties are actually considered a liability on the balance sheet of
the bank, so they must make sure that they don't accumulate a large
number of these. For this reason, you can usually find pretty good
deals on properties that are owned by the bank. Similar to the method
used to find abandoned properties (that I mentioned above), drive
around the town, city, or country, and find properties that have tall
grass and look abandoned. Often in residential areas, these properties
are owned by the bank. Simply find out the bank that owns it, contact
them, and see what happens. You may get a great deal directly form the
bank or get a heads-up on when and where the property will be going to
auction.
With the five steps above, you now have the outline of a
great real estate purchasing plan (if you didn't already). Use it to
your benefit, and begin building you territorial dynasty that you where
destined to lead.
The author is the founder and owner of LandLordDocuments.Com
