Bank Owned
Whats the deal with these bank owned houses. Every one that I've seen so far look like crap. Do the banks wait until they are falling apart to own them? Whats the advantage of getting one from them? Is it difficult? How soon could you sale a house after you buy it from them?
-S
Hopefully you can get a good deal because of the condition of these houses. It all depends on what you want to do with them.
You might pick up cheap and then wholesale to a rehabber. But it is advisable that you already have a buyers list in place so you can sell it quick.
Or maybe you might want to rehab it yourself. This doesn't mean you do the work. The best way is to hire contractors and handymen while you keep free to find other properties. Just make sure the price is right. You want to account for the cost of rehab plus another 10% for surprises and another 20% for your profit. Deduct all that from the ARV and the remainder is what you buy it for. If the bank (seller) wants more than that, consider it not a good deal.
Good luck,
Glenn
Sourcefinance,
Anything you get from a bank that looks like crap, is a goldmine. You can fix up the house and sell it ASAP. You you selling to an investor or a owner occupied homeowner. If it looks as bad as you say make sure you check the main drains, I know someone who had some kind of cement in his, I also know someone who had a wrengch in the furnace. You can get a home inspection on any of these properties after your bid is won.
Good luck
[addsig]
Well it looks like a late 80's house. So if all of the plumbing checks out, do you think it would be better to wholesale , short sale, or rent it out?
Source
Source, I think you need to educate yourself before you make any sort of decision. Selecting a home to invest in is not as simple as checking the plumbing or furnace. It would be wise to disregard Lori’s advice, as she hasn’t been providing the best information to TCI users. You have two issues here...
1) Is the house worth purchasing? First, you need to determine if the house has potential profit. This has nothing to do with how much cement may be in the drain or if they stuck a wrench in the furnace. You need to have a professional inspect the home and explain (in detail) the work necessary to repair the home. You need contractor estimates so you can turn those repairs into your cost. I recommend you do not do these yourself, as you don't seem to be familiar with the process. It will cost you $200-300 or so, but could save you a bundle in the long run.
2) What investment goals do you have? If you want to rent out homes, it makes little sense to purchase a house to wholesale. However, if you want to wholesale a property, it makes perfect sense to purchase a house to wholesale! Sound dumb? Well it isn't. CREI has so many fields, it takes a long time to get proficient in one area. Decide what you want to do then find homes that fit your investment plan.
Oh, and to answer your original questions.
Do the banks wait until they are falling apart to own them? Banks don't wait until the homes are falling apart, they wait until they foreclose on the home. By definition, a REO is a property the bank has repossessed. Generally, when you forcibly remove a family from a house they worked hard to obtain, they aren't too happy about it and don't leave peacefully.
What’s the advantage of getting one from them? The advantage is you can purchase the home below FMV and fix it up. When a house has a lot of cosmetic work but few functional issues, it can be a gold mine. Retail consumers aren't interested because it looks ugly. Ugly is easy and cheap to fix. Foundations, HVAC, roof, plumbing, and electrical are not.
Is it difficult? It isn't difficult. Most REO properties are being sold through a realtor. Contact the realtor or use your own to make an offer.
How soon could you sale a house after you buy it from them? You can sell the house the day you buy it. However, a lot of loan companies require various amounts of seasoning. Unless you have an all cash buyer, you may have trouble selling the house before 90 days (min) since this is the FHA seasoning period. Some loan companies require up to a year!
Hope that answers a lot of your questions. Keep reading the boards until you are certain you are ready. While buying first and stumbling your way through the deal can be very educational, it can be extremely costly! The boards are free, and free is my favorite price.
-Chris
_________________
Live long and be profitable![ Edited by c-brainard on Date 02/22/2004 ]
Hey thanks a lot, that was good advise. Also...thanks for actually answering my questions.
I think I want to find people who just cant pay their mortgage anymore, and just want to get a new start. There are lots of those, at least I run into people like that.
Source
Quote:
On 2004-02-22 04:16, c-brainard wrote:
Source, I think you need to educate yourself before you make any sort of decision. Selecting a home to invest in is not as simple as checking the plumbing or furnace. It would be wise to disregard Lori’s advice, as she hasn’t been providing the best information to TCI users. You have two issues here...
1) Is the house worth purchasing? First, you need to determine if the house has potential profit. This has nothing to do with how much cement may be in the drain or if they stuck a wrench in the furnace. You need to have a professional inspect the home and explain (in detail) the work necessary to repair the home. You need contractor estimates so you can turn those repairs into your cost. I recommend you do not do these yourself, as you don't seem to be familiar with the process. It will cost you $200-300 or so, but could save you a bundle in the long run.
2) What investment goals do you have? If you want to rent out homes, it makes little sense to purchase a house to wholesale. However, if you want to wholesale a property, it makes perfect sense to purchase a house to wholesale! Sound dumb? Well it isn't. CREI has so many fields, it takes a long time to get proficient in one area. Decide what you want to do then find homes that fit your investment plan.
Oh, and to answer your original questions.
Do the banks wait until they are falling apart to own them? Banks don't wait until the homes are falling apart, they wait until they foreclose on the home. By definition, a REO is a property the bank has repossessed. Generally, when you forcibly remove a family from a house they worked hard to obtain, they aren't too happy about it and don't leave peacefully.
What’s the advantage of getting one from them? The advantage is you can purchase the home below FMV and fix it up. When a house has a lot of cosmetic work but few functional issues, it can be a gold mine. Retail consumers aren't interested because it looks ugly. Ugly is easy and cheap to fix. Foundations, HVAC, roof, plumbing, and electrical are not.
Is it difficult? It isn't difficult. Most REO properties are being sold through a realtor. Contact the realtor or use your own to make an offer.
How soon could you sale a house after you buy it from them? You can sell the house the day you buy it. However, a lot of loan companies require various amounts of seasoning. Unless you have an all cash buyer, you may have trouble selling the house before 90 days (min) since this is the FHA seasoning period. Some loan companies require up to a year!
Hope that answers a lot of your questions. Keep reading the boards until you are certain you are ready. While buying first and stumbling your way through the deal can be very educational, it can be extremely costly! The boards are free, and free is my favorite price.
-Chris
_________________
Live long and be profitable!
<font size=-1>[ Edited by c-brainard on Date 02/22/2004 ]</font>
Great advice, Chris. Just the kind of input that I have been searching for. I'll be watching for more!
you can't short sale AFTER the bank has taken possession, true?
I guess you just use the same methods to show how crappy it is to get them to come down off their price.
In MA REOs list at FMV, not many deals up this way in REOs
I'm a newbie and have spent hours and hours reading on this site and others like it. I am diligently trying to educate myself on as much as I can before I make that first offer. My main investment goal is to buy real cheap, rehab, sell retail. I have located @ 20 properties in the last few days that are bank owned and are listed for less than half of their 2002 county tax assessment. Most are pig stys, some are in pretty good shape(judging from pics). Seems to me from what I've learned so far, REO's are an easier purchase; especially for a newbie;, in terms of ease of locating(listed publically), less risk(hidden liens, judgements, 2nds) no "owner" to hasstle with. Right or wrong? Or both?!!
Later,
Sickdog
So what's the verdict? Is this a sound decision(to go for REO's first) or am I off track?!
Thanks again
Sickdog
Sickdog,
I am a newbie and have reached the same conclusion as you. REO's would be a good way to start for all the reasons you stated. Do you understand loan seasoning? I am hoping to understand it better before I begin investing. I plan on being a re-habber. I have about $250k t start out with so I hope I can make a reasonable start.
Chris
Í'm a 20yr old British Expatriate looking to invest to allow me to put aside my full time job and return to college, whilst pursuing with more dedication, property letting (leasing)
I look to re-invest returns into foreclosure properties either for renovation for sale at
market value or for long term appreciation and leasing purposes; all dependant on the specifics of the property market in question. In the arena of property letting (rental) I had looked to the idea of renting out to college students, ofcourse with the pre screening measures taken. Beyond that specific tenant group, I'm looking to seek condensed information on regional property market conditions, nationwide. What areas are to see surges in tenant populations, rental rate increases and overall property appreciations; from state to state, county to county and so forth.
With $170,000 to start up I have many avenues in which to pursue, using as little of this
sum as possible for intial deposits, in the securing of investment loans/mortgages. Right
now my main objective would be towards making these funds work for me. After taking a year
out of college to work full time and saving to invest I would like to return to college
(now recently turned 20yrs old) and pursue property investing as an accompanying
occupation. A rather good way to fund my tuition fees.
****Just as a parting story that could be of inspiration to young investor/first time
homebuyers***
I also purchased my own home last year, at a discounted price, and as of now have $32,000
of equity. It was bought with 0% down using the FHA loan maximum(you've got to love
Texas). Using a few municipal grants and lenders incentives I was also able to finance
upgrades the closing cost and recieve $1000 cashback.
Real estate school was mightily helpul. I had no establised credit history.
I also live in the Dallas-Fort Worth area (Frisco) and would be interested in joining
local and nationwide REI groups. This past weekend 2/28/04 I attended a National grants
conference, and heard about securing low interest government loans to refurbish dilapidated
properties. I currently have some real estate contacts who I have been inquiring into this
for me, but I would be interested in establishing contacts with other investors and delving further into what municipal grants are available for such projects throughout the Texas, Metroplexes.
Valentine N.
I'll be placing a list on my site starting next week. Check it out. www.inforeclosure.net
I need all the input I can get concerning this. [ Edited by bj2964 on Date 03/04/2004 ]