advice for novice investor
I am working on buying my first invesment property and I am looking to buy a property own by a lender REO. I was hoping in at least getting the property at a 20% discount, so that I will have room for repairs and profits. Am I on the right track, is this the way it usually work or should I plan on paying a little more money for them. I have read on several real state books that if you are thinking on buying a property to fix and resell it should be at tleast at 20% discount otherwise you won't room for profit.
thanks
M.Caballero : <IMG SRC="images/forum/smilies/icon_wink.gif">
[ Edited by mcaballero on Date 11/28/2002 ][ Edited by mcaballero on Date 11/28/2002 ]
I am a newbie myself, but this is what I understand. On REO's - the bank gets reimbursed from the insurance carrier for 20% of the amount the lender foreclosed on - if the property had a PMI attached to it. You can see if the property has PMI attached to it buy checking it out at the courthouse - look for companies like GE Capital or Radian Group - those indicate PMI is attached. Double check this information with the veterns here - but that is my understanding.
He's right! I would not pay a 20% discount on REO unless it was ready to go. This does not happen often ,but can happen.... you walk in, no holes, nice furnace, 100 amp box, nice tall mast, OK carpet, roofs fine, GFI's everywhere, shut off's on all gas and water but needs gutters and a paint job. Some thing like that. I might go 20% on sometihng like that. 9 out of 10 of the deals I buy are 35-40% discount at least. I just don't care if I love it or not, I can pass on all of them, I have the money, not them. That's how you gotta be with these banks, you just don't care, because YOU are the guy that makes offers on all kinds of property and YOU do not deal on emotion, just the numbers baby! Make lots of crazy offers, not too many at once though. But as soon as one falls through offer on the next....something awfull, make them cry. When you start doing this without hesitation early and often, the deals will come because YOU made it happen. And when you catch that house that you missed something on, like a bad stack or something. You still don't care, because you are in it sooo right, it's still a good buy. I'm closing on 2 of them for 40% off on the 28th of this month and closed on 1 50% off last week. Don't forget that buying them with alot off work to do is OK as long as you pick them up for nothing, because you can write off almost the entire cost of what you have in the house.
gtrzndrums,
That was good advice, I'm definately going to use it!