How Do You Find Below Market Value Property?
Hello,
I just wanted to hear some ideas as to how some of you find or prefer to find BMV property whether it be for rehab/flip, wholesale, buy and hold, etc. What have you found is the best way to acquire property at BMV? Appreciate the replies.
Since I don't have a lot of time I usually rely on others. My loan broker brought me a preforclosure. I have used a real estate agent to find listed REOs out of my area in areas of the country where there is a high foreclosure rate.
Dear Leo the Investor
Hercules California
Where is Hercules, If you will tell me I will then list the various resources available to you for finding below market properties.
Off the top of my head here are some of the normal type things.
Listen to Fire calls and run on them. Afterwards many people just want to take their checks and run. The checks do not cover the property so you are able to buy some really hot lots. P.S, Wait til they cool.
Court House, Superior Court at your County Seat.
Family Law see Clerk of the Court. Check Court cases for divorce which may include property settlements. Both parties are really hostile to each other. You try to buy by Quit Claim Deed the interest of one. Promising to give the other one a really hard time. Sometimes you can buy this with only a future promise called a note. Then you go to the other one and try to buy that one in the same manner. You should achieve if you are a really sneeky person a double discount. One from each.
the list comes out once a year in the local designated newspapers of all those bad people who did not pay their taxes. Indication of a problem. Go call upon them and see if you can buy the property and by going around all the brokers www.etc.cut down the cost both to the Seller and of course you. We Brokers hate that.
If you are really goulish and will dress the part you can also run on the Obituaries. One Creepy Crawler used to knock on the door and ask for the dearly departed claiming that he just talked to them a few days prior to death. You are in the door the rest is up to you.
You can also go to the announcement board at the Court House and read all those notices of Foreclosures and also various liens all indication of financial ability upset and maybe upcoming sale of property to cover.
Shall I go on?? No No I have stimulated your interest, go search and sin no more.
Cheers Lucius
Very much appreciate the replies.
Regarding REOs, aren't most listed by realtors and are at Fair Market Value most of the time. I figure the only time to get a deal on one is if it's been listed for awhile and the bank wants to get rid of their properties during the season of the year they do their audit. Is the end of the year the time to submit lowball offers? In any case, if it's a good deal there are a slew of other investors submitting similar lowball offers. Opinions?
I have not yet started to target those with NODs since I'm still trying to learn the ins and outs of Pre-Foreclosure/Foreclosures but I think that when the market makes a turnaround, that's the time where this area of REI is going to be very robust.
I'm not the type to take advantage of the obituaries for reasons need not to be mentioned. I'll leave that subject alone.
I guess I'm still in the "non-creative" mentality of "buy and hold" properties with typical NOO financing. I feel in my particular area of investment properties where appreciation is still strong and steady, leverage as many properties as possible with positive or breakeven cashflow after all expenses, I feel it's still a good longterm investment. We have $100K to work with and excellent credit (both above 700 FICO) and want to take advantage of our resources as best as possible.
What do some of you think of Spec Home Construction, single family and multi-family dwellings for resale or "buy and hold?" Numbers wise initially and the current rents in the area it seems to make good sense. The only downfall in my mind is that we do not have any experience in contracting projects and would have to hire a GC or Construction Manager to oversee such a project. Otherwise financing shouldn't be a problem with our particular situation.
BTW, I live in the SF Bay Area but have been concentrating on investment property in the Sacramento County area.
Again, I thank you very much for sharing your information. Please keep them coming.
-Leo
Hi, Leo
In the areas where I have been looking the bank REOs listed by real estate agents are sometimes way below market. Many, but not all are rehabs.
Regards,
Ed
An afterthought...
My experience is similar to yours in that most of my acquisitions are very conventional. The one twist is that I often get seller carry backs. I feel that what you are doing is very sound. My CA investments have done well and are in areas of rapid appreciation.
That being said I know that if I keep buying conventionally, I will run out of cash. This has made me look for discounted properties where I can buy with cash and then refi my cash back and hold a positive cash flow property with net no money down. It sounds like you may be thinking along a similar vein.
the other thought is to do subject to's. Afterall, there are only SO many properties taht you can have on your persoanl credit bureau, (stated income and all) before lenders do not want to lend to you - even with exceptional credit scores...
Also, if you can get a deal, where you don't have to carry the mortgage, more power to you...
edmeyer,
Yes, I figure conventional NOO multi-family dwellings are still a good bet right now. I've followed that particular market in the area since the beginning of the year and is still very strong and sound investment. I've got a very good NOO Libor loan program 4.5% but it's 80% LTV and plan to cross collaterize on subsequent properties. We've got some money to play with and the credit resources so why not use the leverage to our advantage. The only thing that's I'm thinking is, "Is this the best way to maximize our ROI?" That's why I'm considering other REI venues since there are so many out there that do not requre conventional financing. But if need be the option is there.
Regarding your out-of-state investing, I would be very interested in knowing how you handle them from a distance. I did talk to another investor also based here in the bay area and she has a team setup in other states to purchase and L/O or "Hold" properties with good cashflow and smaller but significantly less expensive properties that in our area. Email or respond here if possible. TIA for your replies.
webuyprops: I'm starting to look into NODs and Sub-Tos in the area. Thanks.
Regards,
-Leo