Real Estate Lender · Member since 2008 · 642 posts · 13 votes
With a dawning of a new era in many respects, I'd be curious how other forum members intend to meet the challenges ahead with respect to property scouting.
In poll fashion, kindly answer the following questions:
What has been your most successful property locating technique to date for finding properties that are available for 50-65% of market value?
Please respond with both the "what" and "how"---example...
What: Canvassing foreclosures
How: Weekly NOD Search at the Courthouse
Feel free to go into depth on strategies, techniques and how-to's if you care to...
Let's have fun with this and share ideas and leave a footprint for others to see and learn from in the future.
EZLoans--
I scout with a different objective than I think you are speaking of in your post. My goal is to secure a listing on the property. But here is one of my methods:
What: Drive neighborhoods. Look for props. in disrepair: high grass, trash, apparent vacancies.
How: Direct mail to owners; cold-call.
No major break through here, but it works. I have gotten listings and found my own buyers because these properties tend to sell at the lower end of the market. People looking for deals contact me directly.
crentalguy is correct! I have purchased properties at WAY below value driving around! Many times they need MAJOR work, but are worth it in the end.
example: my first property abandoned paid 5k, spent 25 fixing it up (VERY HARD TO STICK TO AT FIRST) and every spare penny and minute of my time for 3 years LOL. sold for 80k. More recently 24k sold for 90k with 20 in and in 12 wks done.
Also, lately short sales. With so many foreclosures selling it is lowering the comps prices of the properties around the property in foreclosure and the banks cant get rid of it fast enough when they hear the comps. This is GOOD for the short sale BAD for the appraisals when your trying to sell it for profit. A good idea is to seal the purchase price (if paying cash, don't know if you can when financing).
I find almost all my deals through personal contacts. Lately, I have bought a lot of properties from disgruntled landlords. Knowing a lot of people and having a reputation for being able to close on deals is very important, in my opinion.
I have been on this website for about a year now reading and learning, but have yet to do a deal. I am finally ready to jump into the game. I would like to do the driving around thing and look for distressed properties. My question is, how do you approach the home owners? What do you say?
I have been on this website for about a year now reading and learning, but have yet to do a deal. I am finally ready to jump into the game. I would like to do the driving around thing and look for distressed properties. My question is, how do you approach the home owners? What do you say?
Thanks,
Larry
Larry,
Mike has provided a good answer to your question. Two observations.
1. Just get out there an stumble forward. You will get better with practice. You will run into unknown situations all the time when you are starting. Get comfortable with figuring out the unknown.
2. Consider reading Weekend Millionaire. It has an 8 week action plan. If you need a receipt the book lists a pretty good one.
Funny enough the calculations used to identify good deals are similar or the same as what Mike advocates. Hence any deal that matches the formula should be worth your time.
Get hooked up with a birddog. The local mailman (or woman) is a great person for this. If you have the means to do deals you need to have birddogs out there finding deals for you. The program we use is designed to help birddogs do their first deal. When they bring me 10 deals, I will put down their down payment for them on their first deal (certain restrictions apply of course) This way you help people become educated about REI and help them start to build their portfolio.
now that most states have a 40% or higher forclosure ratio the banks are allowing compilers to access their inventory via websites and distribute their non performing properties and reos to the general public. they are selling these anywhere from 35% to 65% ltv. traditionaly it was hard for the smaller investor to obtain these properties in this mannor due to the higher minimums set at $10,000,000 but now the banks are allowing even single properties to be obtained in this mannor. i am happy to refer anyone to a broker or compiler i have used if they are interested.
now that most states have a 40% or higher foreclosure ratio
Far from true.
The national average is close to 5% of all loans are having problems (late payments or worse).
40% has never happened in the US from the stats I have seen. Even during the Great Depression it was not that high.
None of the above is meant to mean there are no deals out there. Just that it helps when people promoting things use facts that are correct. It goes to creditability.