This article is intended to be an overview of finding investment property below market value. There are several other articles that follow this article, but I wanted to touch on the major areas that can help you to find profitable real estate investments. Some of these techniques are easy, and some of them take time to develop. But bear in mind that if a technique is easy, there are probably a lot of people out there that are doing it, and therefore you have to be one of the first ones to find the property, if you are going to have a chance to win the contract. So let’s look at some of these areas, in order of easiest and quickest, to most profitable and difficult:
HUD’s Online Foreclosure List
This is the easiest, fastest way to make money in real estate that I have found to date. You simply go to HUD’s foreclosure site, run a search for properties in your area, and presto, you have a list of properties that have been foreclosed and have come under the umbrella of HUD. Now, you still have to have a real estate broker to be able to bid on these properties, but you can bid them at whatever price you wish, and HUD will respond within 1-2 business days of the bid deadline they set for the property.
Ocwen’s Online Foreclosure List
More government foreclosures. From commercial to VA foreclosures, this site has many good opportunities to buy in at below market value. This process is a little more convoluted than bidding online with HUD. In this case, you actually have to send them a contract, and then wait for a response back, which could take awhile. Then, they may counter your offer, and you have to work through the real estate negotiation process. With HUD, you can usually just send a quick offer form, and they get back to you with a yes or no answer, and then you can re-bid if you choose.
Search Your Local Newspaper
Most newspapers these days have websites, which include their full classified sections online. So you could check out the real estate offered in the classifieds, and search for listings that are For Sale By Owner (FSBO) or other properties that need repair, etc. You are more likely to land a low ball offer with these properties than with properties that are listed with a realtor.
Searching the Multiple Listing Service (MLS)
This is something you will either have to find an idx or other method of searching the MLS yourself from the house, or you will have to have a realtor search it for you and give you the listings. You could call or meet with the realtor to refine the list after the initial search, but focus on properties that have been listed for a while (180+ days preferred) or that are in need of some repairs. These are the properties that you will have the most likely chance of landing a contract.
Look at Your Local Tax Sale Auctions
Many people that get into a bind financially, may end up not being able to pay their taxes, and thus, the county takes possession of the property, and sells it at auction to the highest bidder. These auctions typically begin with the amount that is owed in taxes. Now, two major things here – you must be aware of the liens that are against the property, as you will be inheriting those liens. And second, you typically have to have a cashier’s check within the same day or 24 hours to pay the sheriff, else he will come and get you. So know what you are getting into before bidding on these properties.
Scroll the Probate Records
People die, it’s just a fact. When they do, often their property gets put into probate, and can get tied up for long periods of time. So if you can search the current probate properties at your local county courthouse, you can come up with probable real estate. Once you have found interesting properties, you can then contact the beneficiaries and see if they would be interested in cashing out with you, instead of running the full course of the probate process, which could take years.
Networking / Back End Network
This is the hardest, most rewarding way to find great deals in real estate. Currently, I am working on a 4 duplex deal in my area with an owner that doesn’t even have the property listed for sale. How do you find a property like that? Get to know people in the business, establish relationships, and then ask them from time to time if there are any deals coming up. These are where the monster deals are made. Trust me.
So stay tuned as I go through, in detail, these methods of finding real estate below market value. If you have questions, feel free to ask them below on RealEstateGeek.net.