Looking to get started investing in real estate. Interested in flipping. I've been looking at foreclosure properties Hartford and Tolland County. Since I'm new to this it's hard for me to accurately estimate how much renovations will cost and how much a property might actually sell for. But everything I've seen seems priced where once it's purchased and renovated there is little room if any for profit. I doubt banks are going to come down on price by $30k but that's what it seems like they would have to do for a profit to be made. Maybe foreclosure properties aren't the best way to get started?
You are definitely right; most of the properties for sale out there are not deals, whether or not they are foreclosures. To find a good deal, you will most likely have to do some leg work to beat out other investors also searching in your area.
A few suggestions;
- It may be better to find properties that are in pre-foreclosure, that way you can try to work with the current owner to make a favorable deal rather than working with a bank.
- Drive/walk the neighborhood to find properties that look vacant/unkempt and do a little research to find out who the owner is and see if they can be interested in selling. You may be surprised and an absentee owner of a vacant property may be willing to get rid of their property to you for below market value.
- Keep researching how much rehabs will cost so you can be equipped to quickly analyze properties that come your way.
Best of luck!
Yes you are going at it the wrong way.
It's like you are trying to find an orange tree in Canada.
They don't belong there! Finding a crazy homerun deal on MLS is not going to happen (often/at all/ever?).
You need to find leads where no one has access to them. The only way to do that is to think. Be smarter than your competitors and work more efficient.
If it was easy everyone would be rich.. or no one would be.
Many people make deals from pre-foreclosures.. or at least so they say. I have never made one and I don't care to make one. It takes too long and it is too annoying and too much work.
All the deals I get (and they are quite a lot) fall in my lap without much effort.
Everyone can do this as long as they step up.
I think when the inventory of foreclosures was high it was possible to do this 5+ years ago. I tried the same strategy about 2 years ago now and yeah I found a few that I think would have worked. Like you though I was hesitant with my renovation costs. At some point you really just have to jump in and do it. Until you do it kind of just feels like playing a game of monopoly.
But to everyone's point above you really have to work on finding the deals that aren't on the MLS which can be much more challenging but obviously that is where the 'homerun' deals are going to lie.
I agree with @Michael Cavicchi . You have to wonder that at some point worrying too much about finding a great deal will result in paralysis. I am not saying that one shouldn't try their best to find a good deal, but if the numbers work on something you might find on the MLS and the property will yield positive cash flow shouldn't that be enough to get a new investor started? I understand that finding good deals is essential to the flipping business model, but I think there are enough properties even on the MLS that are rehab candidates and priced appropriately that will yield a positive return.
Base hits win ball games and I think it is important to not focus all of your attention on finding that home run deal. With experience, I am sure the home runs will come. I suggest listening to the podcast with Charles Roberts on the "boring" path to real estate success. It has really changed my outlook on real estate investing and given me that extra motivation and reassurance I think is needed to make that first leap.
I always like to air on the side of conservatism, so when I analyze deals, I only pursue them if they seem to be a great deal in the case that if anything goes wrong, it still will likely be a very good deal. This makes me think this particular deal is probably not the best one for you to pursue right now. Right now there are very little distressed assets, making this time in the economic cycle a difficult one to find great deals, and especially with foreclosures.