I'm in a process buying an investment property for $235,000 right now (single family home, 4 beds, 2 baths, close to two main universities), but I keep hearing people buying REO properties around $100,000 (not necessarily here in Utah). My cash will not go very far if I have to keep buying expensive properties like that and I will not be able to buy them very often either. Does anyone have suggestions where I could find deals that would be around $100,000 in Utah Valley that are fixer uppers, but not total money pits? Are there websites/banks/institutions that you like to use to find REO properties? There are websites that will require me to pay money to access some REO properties and I don't mind paying, if they are legitimate.
Specialist · Salt Lake City, UT · Member since 2015 · 533 posts · 378 votes
10y
@Kristi Harmon REO properties will all be on the MLS and will be listed by a realtor. The websites you can go to see some of them will be Hudhomestore.com and Hubzu.com. There are certainly some deals you can get that are REOs but the main supply of the cheaper deals will be off market properties or properties not listed on the MLS. You can find these properties in different ways: Direct mail to absentee owners with high equity, code violations, probate, inherited, divorce, vacant and distressed properties. Some of these you can buy a list for and others you may need to do a little work to get. Vacant and distressed homes can be found by driving neighborhoods. You can also use bandit signs, door hangers, online advertising, google adwords, SEO etc. I just sold a property in Sandy for $135K and three properties in Ogden for $55K each. The cheap deals are out there! Let me know if I can help you!
Real Estate Broker · Salt Lake City, UT · Member since 2015 · 145 posts · 150 votes
10y
Hi Kristi.
I applaud you for trying to stretch your cash by going into a lower price range. The lower price range also increases your exit options. Perhaps it won't sell and needs to become a rental? This is much easier at $150k than $250k!
Don't overpay. In Utah right now, the good REO deals have tons of offers and by the time the dust settles, the buyer has usually overpaid. The new investors often do not factor in ALL of the costs, and if they are not careful enough to cancel before their inspection period (Due Diligence) is over, they often end up simply breaking even on the rehab. And after factoring in their own labor, they really are losing. However, if the market continues to go up, and if they are really slow on the rehab, the market could cover their mistake... LOL. But NEVER plan on appreciation on a flip. Just buy right.
How to find them? Find an agent to help or keep searching for an REO website. I just use the MLS, because they are all on there. I will try to set up a link on my website that will pull up all the REO properties. I am sure some other people will have good suggestions. But try Homesteps.com for Freddie Mac homes. HudHomestore.com for HUDS. Homepath.com for Fannie Mae homes.
Specialist · Salt Lake City, UT · Member since 2015 · 533 posts · 378 votes
10y
@Kristi Harmon REO properties will all be on the MLS and will be listed by a realtor. The websites you can go to see some of them will be Hudhomestore.com and Hubzu.com. There are certainly some deals you can get that are REOs but the main supply of the cheaper deals will be off market properties or properties not listed on the MLS. You can find these properties in different ways: Direct mail to absentee owners with high equity, code violations, probate, inherited, divorce, vacant and distressed properties. Some of these you can buy a list for and others you may need to do a little work to get. Vacant and distressed homes can be found by driving neighborhoods. You can also use bandit signs, door hangers, online advertising, google adwords, SEO etc. I just sold a property in Sandy for $135K and three properties in Ogden for $55K each. The cheap deals are out there! Let me know if I can help you!
Great comments! I'm mostly looking for something that I can buy and hold, around Provo and Orem area (3+ bedroom houses) with some TLC. Since I'm new in it I would like the properties to be close to home and population that I know need to rent. Flipping doesn't seem to be so profitable right now here in Utah (unless I get a house that is around $100,000) and I don't have time and contacts to pull off a flip yet either. My agent has set me up with his MLS account, but I don't see very many REO properties on it.
That is amazing that @Jeff Rappaport were able to sell houses for that cheap and hopefully still make some money off from them as well!
I have considered doing mailers--I have worked as a designer for 10 years, so it should be easy...right!!! ;) When I get the keys to the house that i'm purchasing right now and renters in, I'll send my mailers out as well.
Centerville, UT · Member since 2016 · 51 posts · 9 votes
10y
Hi Kristi Harmon I am from Davis County and I am just getting my feet wet in real estate investing. I've been wondering the same thing, but how come flipping isn't super profitable right now in Utah? Just because houses are more expensive now? Sorry if that's a dumb question, I'm just getting started and trying to soak up all I can. Thank you!
Seneca, SC · Member since 2016 · 85 posts · 23 votes
10y
Call for rent signs and try to see if you can find any tired landlords. You might get a better deal out of going direct to a potentially motivated seller than trying to buy off the Mls and or buy reo properties.
Also get connected with a local real estate club and some local legit wholesalers. You may be able to find some good deals that way because those guys are already doing the hard part of searching for and finding deals.
Good luck!
The last 6 months have been very hard for investors everywhere. The market has been so strong that all the distressed sellers told themselves "I am not going to get suckered into Steve's lowball offer. I will hold out for more, the market keeps rising and I know I can get what I want!"
Couple this with all the new buyers entering the market creating multiple offers and you have a deadly investor mix UNLESS you do as @Jeff Rappaport suggests and find your own "off-market" deals. (BTW, my record is now seeing 46 offers on one property - It's nuts!!)
Rental Property Investor · Salt Lake City, UT · Member since 2016 · 17 posts · 4 votes
10y
@Jeff Rappaport were the houses that you sold in Sandy and Ogden wholesale deals? I was thinking that might be the way I want to go, but since I am just starting out, I don't know any wholesalers yet. Also, can wholesale deals be conventionally financed?
The house that I'm the process acquiring right now was not on MLS yet--found it on KSL.com. Supposedly I contacted the owner right when they hired an agent and were going to up the price. Maybe they were just yanking my chain, but I was happy not to deal with other buyers.
I also called to couple of places with "for rent" signs. The landlord for one of the places (fourplex) was really nice and talked to me for a while, but she was saying that she doesn't want to sell right now because of the taxes she has to pay. Her plan is to die and then the kids can deal with the inherited rental property and pay less taxes when they do sell it. I don't know how all the tax breaks work, but is there a way to convince some of those retired property owners to still sell? Can it turn into a profitable transaction for both of us or should I move on?
I'm also bit hesitant to buy a multi-family properties right now, since we have so many fancy new apartment buildings built and being built around my neighbourhood. Right now, people are asking a lot of money for those older multi-family properties. I wonder if the prices will start dropping soon, because of so many new constructions.
Did she still have mortgage on it? If not, seller financing could be an option.
I'm pretty sure they don't have a mortgage on it. So, from you experience, what kind of deal would you make with the seller to get them to do a "seller financing" with you (interest rate, down payment, time period, balloon payment etc.)?
Investor · Draper, UT · Member since 2016 · 120 posts · 57 votes
10y
Everything is negotiable. Of course, it would be better for you to have less cash up front. But the seller might not accept it. You should have some numbers that works for you. Maybe just mention seller financing and see if she would consider it.
Specialist · Salt Lake City, UT · Member since 2015 · 533 posts · 378 votes
10y
@Cody Tanner, yes they were all wholesale deals. Typically, wholesalers are not looking to work with buyers who need to get conventional financing. Conventional financing takes too long (usually wholesalers have a quick time frame to close) and if the wholesaler is assigning the contract then it will not be possible for them to get paid. The best way to deal with this is line up hard or private money and be able to pay cash quickly for the property and then turn around and refinance it. Check with your conventional lender about how long they would like you to be on title (seasoning) before they will refinance the property.