With the steady improvement in the economy, US property prices have been increasing as well. The good news is that banks still have a huge stock of foreclosed homes that they are trying to sell. For investors, this is a cheap way to find good homes. New homes are not yet available on a large scale as the construction industry has yet to recover from the 2009 recession. The only available, low budget homes are foreclosed homes. Investors can buy at below-market rates, renovate the homes, and rent or flip these properties for a neat profit.
So Easy?
Yes, the process is easy says Jeff Adams, the #1 real estate trainer, but there are a few industry secrets that no one is going to share. Before you step into the real estate investment market, here are a few things you should know:
- Find an experienced local agent – Local realtors know their community well. They know properties that will come up for sale, properties that are in pre-foreclosure, etc. and this will put you ahead of anyone else in the area.
- Avoid bidding wars – Most real estate buyers advertise their properties at well below-market rate to pull in buyers. Once the buyers are invested in the purchase, they start a bidding war and this hikes the price up. Prevent this by planning a budget and sticking to it.
- Hire an experienced property manager – As an investor, you won’t have time to renovate and rent out your property. Finding a good property manager will mean that your property is maintained, bills are paid, repairs are done and all other complaints are managed by the management company.
- Get your finances ready – Before you start investing, you have to pre-approve your loan. However, you should know that obtaining financing for these properties is very different. Higher down payments and above-market interest rates are common.
- Keep careful records – Buying and selling properties will catch the interest of the IRS. Make sure your documents and financial records are in perfect condition.
- Property condition – Most buyers do tend to underestimate the condition of foreclosed homes. Even new homes may have hidden issues. Before you buy a property, hire a property inspector to check the house over from top to bottom.
- Get a general contractor as a partner – Having a general contractor as a partner can really save you a lot of money. They can act as unofficial property inspectors and renovate the property fast and cheap.
- Determine fair market value – Yes, a local realtor is helpful but you have to do your research. Make sure you check the local market value of a home, its condition, repairs required, reputation, etc. before you invest in the property.
- Pre-Foreclosures – Look for properties in pre-foreclosure as you can get the property at a lower than market rate.
- Finally, proceed with caution – Buying and selling properties is a huge rush but always use restraint. You are investing money in a property that should bring in a profit.
Make sure you do your research before spending a single penny, says Jeff Adams.
