| I thought I’d write a little post about the overwhelming trend of real estate investors to pursue the many opportunities offered by homes in the foreclosure realm. Subprime lending, along with other factors, is supplying the market with an unprecedented amount of loans in default and beyond. The whole process begins when a borrower falls behind on their payments and the bank assumes possession of the house. That bank then puts the home up for sale at a public auction, taking place at the county courthouse. But if the property isn’t purchased by an outside bidder, the bank turns around and puts the house back on the market through a real estate broker—usually at a competitive selling price. With the varying steps in the process, it’s easy to see how each one lends itself to unique investing strategy. For instance, certain investors specialize in pre-foreclosure investing. This is where an incredibly motivated seller is in need of help and in need of an exit strategy out of their mortgage; indeed, many times the seller is only one step away from losing their home. The pre-foreclosure investor comes alongside the troubled homeowner and solves their problems, avoiding a foreclosure, while securing a discounted purchase price. However, there are other investors who are courthouse auctioning geniuses. They know when to bid and when to pass and have enough financial clout to make it worth their time. But beginners beware. Many of the properties offered at public auctions don’t have much equity, and the homes that do usually attract a number of bidders which serve to inflate the price. It is, however, a viable option and an investor could potentially leave with an unbelievable deal. And then there are the investors who step in even further along the process, once the bank has put the house—clear of title troubles—back on the market. Not surprisingly, the bank’s motivation level is increasing exponentially at this point. Prices on such homes will go down, especially after sitting on the market for more than three months. This is when the smart investor snatches up the home at a mere fraction of its true market value. So, when you hear people talking all about how real estate investing is a thing of the past—not a choice the informed make—well, you know better. |
May 31, 2007
When Opportunity Knocks: Investing in foreclosure properties
May 30, 2007
Making the best flip for your dollar
One of the most popular choices for real estate investors is cosmetic rehabs—probably because they are so accessible. Unlike gut rehabs that require major structural repairs like a new roof, for example, cosmetic rehabs need only minor repairs. This post is written to divulge some easy, realistic pointers on how to flip a house without dipping into your children’s college fund.
I’ll start with paint which is incredibly cheap yet has the ability to alter an entire room’s ambience. It can turn a dated property into someplace chic and classy. Choose your paint colors, however, based on resell power and not on personal tastes. (Save personal touches for your primary residence.) The current trend for new homes is beige or tan walls with white trim. I urge you to follow this example because your payoff will be big when it comes time to sell.
Take time when you paint. Buy blue painter’s tape and tape of everything for a clear, crisp finish. Never paint over hardware; always take off outlets, vents, etc. If you don’t have the time or the inclination for this sort of detail, then pay for professionals.
The shape of a home’s floors also impacts the potential buyer. Put yourselves in their shoes—is the carpet ratty? ugly? dirty? You can fix such problems relatively inexpensively. For example, if the carpet looks salvageable, try a deep cleaning and conditioning treatment—it can make the carpet look new. And, if carpet is not working, there are plenty of imitation wood options which are simple to install, easy to clean, and look impressive once they’re laid.
And definitely do not neglect the importance of cleaning or of hiring a cleaning company. Just like your thorough painting job, don’t settle for a surface clean. Believe it or not, a buyer can sense this sort of thing and a truly clean house increases the buyer’s confidence in that property. To them, if the house is thoroughly cleaned, then it’s in great shape and the unseen features of the home (for example, electrical wiring) are more likely to be in great shape too.
While there are a lot of other things you can do depending on the particular property (landscaping, new front door, new knobs on bathroom cabinets, to name a few) these tips will put you in the lucrative direction of successful flipping.