I just signed on a Fannie Mae foreclosure and got what I believe is a good deal. The house last sold for $70,000 in 2007, foreclosed and was listed on HomePath for $39,900. The property was assessed at approximately $55,000.
Before I offered a bid, was told that Fannie Mae usually doesn’t go lower than 5% on the listed price. However, I started with a bid of $28,000 and after several rounds of counters we agreed on $33,500, 16% below the list price.
This was my first deal and the final price was marginally higher than I wanted to pay on the first purchase but I have the option to back out or re-negotiate if the inspection report comes back ugly.
Would appreciate any experienced buyers critiquing this deal. I’m looking for realistic wisdom not a pat on the back. In fact, it worked out so easily I’m wondering if there isn’t a hidden trap somewhere.
What is the exit plan on this property? It really does not matter how awesome the deal is if you have a poor exit.. Honestly I have seen some people in the industry that are awesome at finding the properties and get them at 40-60% and they lost them in Foreclosure because they had no idea what to do with the property. I have taken properties at 90% and made money.
Well, my plan is more or less to accumulate several properties which in turn will produce rental income and I’m trying to keep initial expenses low, buying only properties that would be rentable. I can maintain the property without renters for the time being.
Your plan sounds interesting and it seems many people on this forum take that approach. One question I have is, how do you know you can re-sell a property in the present economic climate? It doesn’t seem like houses are moving too quickly. What indicators in a given purchase do you look for to determine the likely hood of finding a buyer once you are ready to flip.
If buying to hold you should contact one of the Moderators here and buy his book… If he is still selling it… It sounds like he has some wisdom you could use… Be careful not to get your feelings hurt cus he does have an opinion now and again…
I think his name is PropertyManager
Good luck
PS seems to me the numbers you left out which are more important then what you paid for a rental are the cost and income expectations…
As for when to sell… The main factor is to look at days on market… When that number start creeping towards zero you know you’re in a sellers market and can start seeing some appreciation…