Dear Fine Members,
I have for several weeks now been educating myself on matters of real estate and having recently come to the realization that there is no positive cash flow to be had in my area i have begun persuing distressed or foreclosed homes etc etc. It has been during this time that i have approached many “professionals” in the field and asked for their opinion on how best to go about acquiring the aforementioned properties. Needless to say, this question to my surprise would not come with a majority answer. In short, i have received many answers, from what appeared to be many a professional and have gotten little if any clarity on the subject matter.
So it is with my sincerest curiosity that i come before you all and ask to be educated. I have several of the basics down , but feel i am not able to connect the dots. Any help in this matter would be greatly appreciated …“you’re my boy blue”
There is ALWAYS a positive cash flow in any area. Your target market is owners in distress or “must sells”. Once you have acquired your property, the biggest mistake many investors make is only renting out the usage and occupancy of the property.
By using certain methods, you can virtually double your rental income. How? By trading such valuable items as mortgage interest writeoffs, property tax writeoffs, future appreciation, etc. with your tenants. It can be achieved through the use of a land trust, specifically a NARS trust.
I’m sure you will receive many helpful suggestions. This is just one of them. Best of luck to you.
Hello Frank
See if this might help you with distressed property.
It is a good formula to make sure you don’t pay to much.
You need to get comps. Go to your friendly Realtor and get comps for homes in the same area. These comps need to be for sold homes only.
Sold in the past 6 months. If your a 3/2/2 the comps need to be for 3/2/2’s . Close to the same size Lot’s.
Yes you should drive by the comps and make sure they are good comps.
After Repair Value “ARV”
Now take the ARV and multiply it by .70
Then subtract the rehab cost + 5%
Then subtract the holding cost {insurance,taxes,utilates}
Then subtract the cost of the money
Now what you have left is the very most you you can pay for the house.
Start bidding low. That way if you need to you can always go up.
;D
Bruce
Thank you both for your input. I value your advice and will make every attempt to incorporate them into my business plan.
I’ve been reading on this as well. The answer is really it depends on your state, how much money you have, what your skills are, etc. I’m reading, “The Complete Guide to Investing in Foreclosures”. You still have to do your own research to fill in some of the blanks since each state is different. However, it’s explained it pretty well.
Let’s face it. If it was really easy and completely cookie cutter, then everyone would do it. Then that competition would eliminate the profits.
Marcus, you’re absolutely right in stating that if it was easy everyone would be doing it. And for your response i’m thankful, but my issues don’t lie in how difficult the foreclosure process is. The constant feeling after researching for hours at a time that all i’ve done was spin my wheels is what’s beginning to frustrate me. I’m ready to accept the challenges and/or obstacles that may arise as a result of real estate investing, but i’m not interested in wasting more time than the normal curve will allow for. I just want to be sure i’m utilizing my time in the most productive way. So until i can figure out how to penetrate the foreclosure listings and opportunities my wheels will more than likely remain spinning. However, it is with an unobstructed sense of determination, not to mention the help of my esteemed REI members that i’m sure some head-way will be made in this “niche”. If not, a Miller-Lite and a Xanax should do the job. But seriously, it’s forums like this that help beginners such as myself and for that i thank you all who have replied and for nothing else read my postings.