Search didn’t turn up much. Can anybody point me to reliable resources on investing in properties in foreclosure or as well as a good primer for real estate in general? My experience with real estate is limited to the small amount of theory in the CFA program. Thanks in advance.
I don’t have any sources, just my primary source knowledge. Here is how my buddy does it (and has been very successful in the past): he buys foreclosures IN BULK. It’s a myth that you tend to get huge discounts on market for foreclosures (as a general rule; there are markets and economies where you might). The way you really get discounts on the market is to buy in bulk in cash. Banks have millions (billions) of dollars in foreclosed properties on their books and a cash buyer is very attractive to them. It’s fast and easy. Therefore, they tend to give significant discounts to bulk buyers–maybe 25% or more. At this point, you put together a syndicate of agents and contractors who make necessary repairs and sell the properties at attractive discounts to the market–say, 5-10%. And as you buy say 10, 20, 30 units your returns can be fairly significant. Example: buy 20 units at market for $4 million or at a 25% discount, so get $4 million in property for $3 million, for $150,000 per unit. Put in $10,000 in repairs, re-sell at $190,000 less 6% selling fee, walk away with a profit of $18,600 per unit = $372,000 profit in about 3 months.
I heard from a friend who is trying to buy a house that banks are working with shell real estate companies that are buying and selling back and forth between themselves so the houses never go to the market and depress the prices even more. Here in the Bay Area, prices are still significantly above the 3x gross household income figure.
You want to buy pre foreclosure. Negotiate with seller and bank for a hopeful short sale.
i’m finding it interesting that i’m hearing of a lot of people who want to get into buying real estate for personal investments. I think there might be a perception out there that huge bargains are readily available and one can’t help but make money. Only advice i can give is to be careful. some properties can be bought 50%+ off for a reason – it’s worthless. there’s a ton of real estate out there that had no business being built or that was bought at plain stupid prices. you still have to be able to distinguish good real estate/good locations that will be in demand going forward. best advice i can give is spend a lot of time resarching and learning your target markets before jumping in. knowing the right locations and product is essential to making good investments.
jbaldyga Wrote: ------------------------------------------------------- > i’m finding it interesting that i’m hearing of a > lot of people who want to get into buying real > estate for personal investments. I think there > might be a perception out there that huge bargains > are readily available and one can’t help but make > money. > > Only advice i can give is to be careful. some > properties can be bought 50%+ off for a reason – > it’s worthless. there’s a ton of real estate out > there that had no business being built or that was > bought at plain stupid prices. you still have to > be able to distinguish good real estate/good > locations that will be in demand going forward. > > best advice i can give is spend a lot of time > resarching and learning your target markets before > jumping in. knowing the right locations and > product is essential to making good investments. +1 Since I have been doing a ton of search lately I have seen a vertiable sh!tton of inventory in Miami. Granted, that is one of the worst areas but still… I’ve also been reading on wikipedia the “plans” for even more high rise condos in that area, I wonder how those plans are going lol. A few of the construction firms listed to build those bad boys are bankrupt.