Real Estate Investing Blog

When you’re working in real estate investment - whether you’re just getting started and putting your business plan into aaction or you have been involved in the field for a number of years - you’re going to hear a lot about the values of investing in foreclosures and REOS (real estate owned by the bank).

While investing in REOs and foreclosures can be a good idea, you just might find that these properties are not always going to be the best investments that you can make. There are a number of reasons for this, but one that is near the top of the list is simple: many foreclosures and REOs are not well maintained because the previous owners knew that they would be losing the home. As a result, unless you do your research, look at the REOs and foreclosres that you’re thinking about investing in, you may find that what started out sounding like a dream come trie really isn’t what you envisioned that it would be.

Focus on the big things - the state of the property and the rental invome value for the home. With those points, you will be in a better position to evalure REOs and foreclosure properties to made a determonation what is the best way to proceed.

When you are thinking that as a part of your real estate investment business you want to buy foreclosures, it’s important to know where to look. In other words, you’re going to want to be sure that you are buying foreclosure properties that are located in the right areas - in areas where you will be able to turn around and sell the property for a profit.

This isn’t just my opinion, it’s also something the Forbes magazine has been talking about:

(source)Only today’s bravest buyers would consider homes in cities like Las Vegas and Tampa, where rampant foreclosures are sinking already weak real estate markets.

But in markets in other cities, where there are hints of stabilization, foreclosed properties might be a good investment.

You’ll find such spots in the Sunbelt, home to Charlotte, N.C., Raleigh, N.C., Oklahoma City, San Antonio, and Albuquerque, N.M. These five cities topped our list of Best Places To Buy Foreclosed Homes.

In other words, there are some areas that are far better than others when you are looking into buying foreclosure properties; you don’t want to buy a foreclosure in an area where the home prices continue to fall - but then, that all comes down to doing your homework and evaluating deals. It’s essential, when you’re buying foreclosures or other properties to focus on the big picture and, of course, your bottom line.

On Mon, May 12, 2008 at 1:07 PM,
Don R. Long, Member ForeclosureMillionaireClub.com wrote:

I did contact other investors and lawyers to find a lawyer who was updated on all the new laws.
In addition this particular lawyer asked if wanted to get involved with estates before they were listed with realtors..Imagine my response. 

Last week my son was told about an REO on water in Annapolis, Md reduced $100,000. I did not know what to tell what to offer. Do you have any experience with REO\’s and what to offer? Don
_________________________________________

Don, This sounds “interesting”.

First, Your basic principal initially, is to approach an REO the same way you would have had you been working on it before it was an REO - - minus the info on the owner/seller (the bank statements, tax returns, hardship letter, etc. and having to explain and get them to sign a mountain of paperwork.

Second, Have you done your due diligence?
(I)Reduced $100,000 from what?
(a)  Current Market Value
(b) What it was listed for by the owners when they were trying to sell it conventionally? 
(c) The total balance owed by the previous owners, and (i) does that balance include the late fees, attorneys fees and realtor commission?
  Or (ii) just what the balance on the loan was before they took it back.               
        (II)What is the property really worth at this point?
        (III)Is this an attractive offer to and ‘end-user’ or an ‘investor’?
        AND – Most Importantly
        (IV) What would be your ‘exit strategy’? 
In other words – what is your Plan A for getting your profit and then, what is your Plan B?
Knowing exactly what your exit strategy would be is what is important to know - - - otherwise - - - how can you evaluate a deal to be a ‘viable’ and/or ‘profitable’ deal.

Best of Success,
Michelle Odessey
Off: 770-338-2797   10:00am - 5:00pm Eastern Time
Fax: 770-338-9208