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Category: General Lending

If you are a real estate investor on the prowl for a new investment opportunity, then the steps of your local courthouse may just be the best place for you to start your search for your next property. However, buying foreclosures at auction can be a rather complex process, and there are a few things that bidders should know before they arrive to make sure they are making a smart investment and are fully equipped to handle the process.

Understanding What A Courthouse Auction Property Really Is

While many people want to go bid on courthouse auction properties, many of these people don’t actually understand what these properties are and what their ownership status really is. Right until the final bid is accepted, the house that is being auctioned off is actually property of the homeowner.

This is not a traditional foreclosure, where the bank owns the property—it is more of a pre-foreclosure.

The most important thing to remember with this very big difference, is that with auction properties, the owner can still reinstate their loan.  Reinstatement, or bringing the loan to current status is typically allowed in most states right up until the initial courthouse auction. There are even some states that have a longer “right of redemption period” for homeowners that are in this situation.  In short, don’t think that the auction is necessarily a done deal as the homeowner still has the opportunity to catch up on their payments.

Another thing to remember is that the homeowner can actually sell the property, right up until the final bid on the property has been accepted. This is why so many people talk about how wild and unpredictable courthouse auctions can be.

Tips on How to Get in on A Courthouse Auction

If you want to try your luck at a courthouse auction and see if you can get a great deal on a great investment, here are some tips on finding out about upcoming auctions.

  • Courthouse auctions are required to be advertised. Typically, this means listings being published in a local newspaper about three weeks before the scheduled auction date.
  • Remember, that many auction sales are postponed, cancelled or rescheduled, so you will need to monitor these auctions to stay on tops of them.
  • You can look in third party websites for more information on auctions, or you can visit the courthouse to see the posting of upcoming properties.

Before you go and start making bids, you can consider going directly to the owner and making them a “pre-foreclosure” offer. This is great for the seller as it can help them avoid having a foreclosure on their record, while still letting them retain some equity. It is also great for you as the buyer because you don’t have to bid against the competition and you get to inspect the property.

If this isn’t an option, then you will need to make sure that you assess the financials of the property and the title.  Have your financing lined up before hand as well. At some auctions you will just need to pay a deposit if you win—others you will need to have the full amount of the property available.

There are so many different types of properties that real estate investors can look into—whether they want to flip them, rent them out or anything in between.  Of course, the number one strategy for anyone looking to invest in real estate is to try to find the best deal possible and for many people that means buying investment properties that are for sale by owner.

Sellers that don’t list their property with an agent (whether they can’t or they won’t) are often the ideal seller for potential investment properties.  A for sale by owner (FSBO) seller is a very unique type of seller. This is because when a homeowner decides to sell their property on their own, there is typically a reason behind their actions—most people don’t just sell their home themselves “just because.”

Typically, these reasons are:

  • They need to sell the property fast
  • They are in a distressed situation and want to sell the property on their own and without realtor influence
  • They are highly motivated to sell and can’t afford to pay the real estate commission
  • The property needs repairs or significant work
  • The property can’t compete with other homes in the same price range and needs to be listed without real estate commissions to compensate

These are not only all reasons why people tend to sell for sale by owner, but these are all also great signs for real estate investors who want to get a good deal.  In fact, this sounds like the perfect type of seller for the average real estate buyer.

Looking for FCBO properties isn’t always the simplest of paths, but there are a few different ways that you can find some for sale by owner homes and see if these leads turn into investments. Here are a few suggestions for finding these leads such as driving our target neighborhood and looking for “For Sale By Owner” signs. You can also drive by your target neighborhood and cold calling or knocking to see if people are interested in buying.

Scanning Craigslist and other area For Sale By Owner sites are also great options, and there are other new wholesaler sites available as well that can help you find leads on for a sale by owner properties.

Once you find a potential lead, there are a few things that you can do in order to make sure this is a good deal.

  • Check the comps to determine if the price is fair.
  • Think about how long the home has been for sale—if it has been for sale for a while, why do you think that is?
  • Determine whether or not the home was listed with an agent before the seller took it over and find out how long it was agent listed.
  • Try to find out why the seller thinks the house hasn’t sold if it has been on the market for a year or longer.
  • Dig to find out why the seller is listing it themselves.

The more information you are able to get on a potential for sale by owner home, the better off you will be—as you can use this information to make sure you are getting the best deal possible on your upcoming investment.

So, you want to become a real estate investor? Perhaps you have seen others make a career out of real estate investing, you’ve been inspired by your favorite TV show, or you’ve just been looking for a new way to make more money. No matter what your inspiration may be, there is no denying that there is some major potential for profit in the real estate investing world.

However, while there is no denying that real estate has made more people millionaires than virtually any other industry—this isn’t exactly an easy career path to take. There are so many challenges that can get in the way of real estate investors and so many important milestones  you will need to reach during your journey.

But if you really want to start flipping houses for money and really want to start being a successful real estate investor—here are a few tips to help you get started.

  1. Know what you are getting into. There are different types of real estate investors.  If you want to be the type of real estate investor that flips houses, your focus is going to be on buying distressed properties and bringing them up to market standards—then selling that property for a profit.  Not all real estate investors do this. Some buy and hold properties and some do wholesaling.  You shouldn’t be doing all of these at once.  Pick what type of real estate investor you want to be (i.e. a fix and flip) and stick with that one path.
  1. Make sure you have the money. Every good real estate investor will make sure that they have the money, time and skills in order to actually turn a profit off of their investment. If you are buying properties with the intention of flipping them, you need to have enough money in place. You will need short-term cash to acquire the property, and then plenty of cash for reservations (make sure you have more than you think you need—reservations always tend to go over budget). You also need to think about how long you will be paying the mortgage on that property before you can sell it. Most renovators hold on to a property for about 6 months to allow for renovations—but it can be more depending on the home.
  1. Think about timing. Whether you are in charge of managing a crew, or if you are a DIYer who is doing most of the work themselves—flipping is a big time commitment. This type of real estate investing take more actual time than other type, so make sure you have the time to commit to the project. Don’t forget, if you want to keep cash flowing in so that you can continue to fix and flip properties, you need to remember that flipping is a “rinse and repeat” business model—where you are going to be doing the same thing time and time again.
  1. Make sure you have the skills. Even if you don’t do the actual work, there are a few skills you need to have in order to start flipping houses. You need to have a solid market to work with and you need to know who your end buyer is going to be. You also need the right team with the right skills to execute all of the marketing, legal and construction access of your renovation process.

Flipping is a great sector of real estate investing and one that can really help you make a great deal of money. But there is also a lot of risk involved. Keep these tips in mind before you start your venture so you can be completely prepared for this new undertaking.

Buying an investment property is a great way to make some serious money.  After all, we’ve all seen and heard of stories about people finding great deals on homes and making some serious cash with them.  However, the first and most important step is to find the right investment property. Without the right property, there is no hope for making money.

So, how exactly do you find these great deal investment properties? There are a few different resources you can turn to. We’ve detailed a few of the best sources for finding great investment leads.

  • The Connected Investor’s Marketplace- Also known as the CI Marketplace, this is a great resource for wholesaling, rentals and fix and flips.  You will find properties that are listed by asset managers who sell these homes on behalf of banks and hedge funds.
  • Bandit Signs- Sure, they may seem too good to be true, the ones that say “We Buy Houses” or offer great deals with signs on the side of the road.  Never underestimate these. They don’t always work out, but sometimes they can be a great resource. These individuals often buy too many houses and don’t have enough time to fix and flip them themselves, meaning you can swoop in and take the property off their hands.
  • Online Auctions- Online auctions can sometimes be difficult to keep track of, but they are also a great place to get a great deal. You of course need to know the market first before you get started. While it can be time consuming to keep track of these online auctions, there are actually websites, such as Deal Dog, that deliver a complete rundown of all of the online auction homes, across a variety of sites, on one easy-to-navigate platform.
  • Driving the Neighborhood- If you have a neighborhood that you really think you could make some money in with the right investment property, there is nothing wrong with driving around and knocking on doors. It is time consuming, but you never know what properties you will see with a “For Sale By Owner” sign in the front, or who may be willing to sell their fixer-upper, just to get it off their hands.

You can find a great investment property and get your foot in the door for the right price if you are just willing to be patient.  Keep these tips in mind and start looking through these avenues to find an investment property that works for you.

Armed with this information, you are now ready to go out and find the perfect investment property to meet your needs. Whether you plan on holding on to a property in an up-and-coming area or if you are doing a quick fix and flip, these are some of the best options for finding a great property to get you started.

If you have been thinking about buying a home, whether it is an investment property, a fix and flip or even your primary residence, the main goal is always the same—you want to figure out how to get that property under contract.  Now, every house is different and every property is going to be listed by a different type of seller, so there may be some differences in getting your foot in the door.

However, the biggest thing that you are going to have to do when it comes to getting any property under contract is to make sure that you execute the documents correctly. After all, so much of buying a house all comes down to paperwork.  Here is what you need to know about turning your offer into a “SOLD” sign.

  • Always make sure that the legal address and description are accurate—this will save you a lot of headache down the line.
  • If you plan on whole-sailing the property, pay close attention to the line items: “Purchaser” and “Deed is Made out to” so that they also include the “and assigns.” This will let you sell the contract to your end buyer.
  • Think about the Earnest Money Deposit, or Good Faith Deposit. It is always negotiable, you just have to think about who you are buying from.  Basically, this deposit shows you are serious and prevents you from backing out without a reason. Sometimes, this doesn’t matter as much to a homeowner, as other factors, like how quickly you will be able to close.
  • Know who will be holding the earnest money deposit before closing. This is typically a closing attorney.  The title office may also hold it. A neutral party should hold the deposit, so that if the deal falls apart, it goes back to the buyer (or the seller) depending on what happens.
  • Be smart with your due diligence period. Even if both parties want to get this deal wrapped up quickly, there needs to be some sort of due diligence period that gives you time for property inspections, surveys, insurance quotes and a title search, among other things.

As you can see, there is a lot that goes into buying a home.  You’ll want to be prepared for all of these things if you are serious about turning a home that you are interested in, into one you have under contract.

While there are many different ways to find good deals on investment properties in today’s market, one of the best ways to get the best deals on real estate is to try to get a pre-foreclosure.  If you aren’t already familiar with pre-foreclosures, they are great because they can benefit both the buyer and the seller, and if you are a real estate investor, you can purchase a property, at a low price, for a great deal, while avoiding competition as you would once the bank owns the home.

A property is in pre-foreclosure, when the home has a mortgage that is in default.  Usually this means, the owner has missed three or more payments and the bank has started the legal process of taking back the home.  You can sweep in and take the home off the seller’s hands before they have to deal with the foreclosure process.

This can be some pretty personal information, which means the average seller isn’t going to be advertising that their home is in pre-foreclosure. However, there are still ways that you can find pre-foreclosures and come in and make a great offer on a great property all for a low price.

  • Visit the local courthouse and look through files of pre-foreclosure legal filings. From there, you can make a list of potential homes.
  • Look at the local newspaper to gather information on potential pre-foreclosures. There are also some home search sites that will list pre-foreclosure information since it is public record.
  • After you have a list of potential pre-foreclosure information, start looking up info on the property you are considering. You want to look at the location, the value of the home, the mortgage information and how much you think you can get it for in order to make the deal worth it.
  • Find a way to contact the owner. You can dig into public records, Google them or even go to the house. While it can seem intrusive, many times, owners are more open to a deal then you may think as it also benefits them as a foreclosure will go on their record and make it difficult for them to ever buy a house in the future.
  • You can then start negotiating with the owner. As the investor, you will want to try to find the perfect price to make the owner happy and make you some money.

A pre-foreclosure can be a great way for you to get a property at a low price, no matter what your end goal with that home may be.  Just keep these tips in mind as you start to look for pre-foreclosures as they may just lead you to the home you have been looking for.

If you are planning on flipping a home, this can either be a huge pay off or a huge bust for your bank account. This is why it is so important to pay close attention to how much you are spending on your renovations. You want to make sure that you are spending the exact right amount. Spend too little, and cut corners, then you won’t get top dollar for your flip. Spend too much money, and you may not be able to sell the home for your desired list price.

The key is to make sure you are doing the right renovations. This includes doing these small, cheap updates that have BIG returns. These little renovations have a big return on investment and can help make sure your home is a profitable flip, instead of a big flop.

  1. Curb Appeal- The moment a buyer drives up to a home, they are going to form an opinion on that home. If it is a good opinion, you are off to a great start. If it is a bad first impression, the interior is going to have a lot of making up to do. A fresh coat of paint, nicely painted shutters, trimmed grass and a few flowers can really go a long way in giving a home curb appeal. While leaving some old “character” in a home is sometimes nice, you should also consider replacing exterior hardware and getting a new mailbox.
  2. First Impression Interior Updates- The first impression a buyer gets when they drive up is important, but the first impression they have when they open the door is even more important. Spend a little extra time on the entryway. Fresh paint, a new light fixture and the right staging can completely transform an entryway and leave a great impression for buyers.
  3. Paint Cabinets- If you have old cabinets that are still in good shape, just a bit outdated, give them a fresh coat of paint. It can help your cabinets look brand new and more clean and updated. While you’re at it, swap out the handles and you will have what looks like brand new cabinets at a fraction of the cost.
  4. Add Molding- Molding is a relatively cheap update that can help any home look super luxurious. Just go for in-stock molding, instead of custom molding and you can have a high-end look with a low price tag. Crown molding is great for any room, while molding around cabinets will help them feel more custom and built in.
  5. Add a Closet- If you have a small office space or rec room that has room for a closet, add one. It is a relatively cheap upgrade, but one that is worth it in the end. Then you can list your home as having more bedrooms, and get a higher price tag. If there is room for one, add it, even if the room seems small. Trust us, it is worth it in the end.

Remember, every home and every market is different, but these general updates tend to always deliver returns and can always help any flipped home appeal to buyers and ultimately sell quicker, and for more, than you may have ever thought.

If you are interested in getting into the fix and flip industry, then you are not alone. This industry is tremendously popular right now, and is filled with both novice and experienced flippers who are looking to make some money off of the real estate market. There is a lot that goes into fixing and flipping homes besides just having an eye for renovations. It involves a great deal of real estate expertise and a lot of patience. It also requires a lot of money upfront. After all, if you want to make money, you are going to need to spend money.

This is why the number one question that new flippers always have is “do I really have enough money to flip this house?” While there are a number of different lending options that can help you get the cash you need, you still need to figure out exactly how much of this cash is going to be necessary. This is why your first step should be to figure out what all you are going to need to pay for.

Here’s a list of expenses that you are going to need to be able to account for.

  1. The Purchase Price of the Property- This is a pretty obvious one. You need to start with how much the home is going to cost. Pay attention to how much the property costs and make sure that it is only 70% of the After Repair Value. You can figure this out by looking at comps in the neighborhood.
  2. The Extras With the House- Don’t forget about taxes and insurance. While you are going to sell the home rather quickly, you are still going to have to pay taxes and insurance on that property.
  3. Closing Costs- You still also have to pay closing costs on any property you buy. This includes all of those little fun fees and real estate commission. A good rule of thumb is to plan for closing costs to be 5% of the total property’s purchase price. So if the house was $100,000 then plan to spend $105,000 total for the house,.
  4. Rehab and Repairs- There are so many unknowns when it comes to rehab and repairs. Remember, the more repairs that you do the more opportunities there are for something to go wrong or something unexpected to come up. Tearing down a wall can be a great solution to get that open concept kitchen, but you never know what is in that wall and what type of electrical or plumbing is in the wall that needs to be repaired or rerouted. Get an estimate on the repairs and save an extra 10%.
  5. Materials- Budgeting for labor for all of the work you need done is one thing, but don’t forget about materials. This means all those new toilets, new sinks, new cabinet pulls, new window treatments and new tile. It can really add up and is the area most people under budget for.

While this can seem overwhelming, these are all of the things that you are going to need to have money for when you fix and flip a property. Once you have these numbers all written down you can really decide if you have enough money to flip that house and get started on this exciting new adventure.

So, you are ready to invest in real estate, and couldn’t be more excited to buy an investment property, fix it up and sell it for the big bucks. Well, congratulations! This can be a great way to make money, but it is also a huge undertaking and one that comes with a lot of risk and a lot of potential setbacks. If you are looking to flip a property, you need to make sure that you are aware of some of the biggest mistakes that people make and some of the big things that can cause those flipped properties to become a major flop.

While there is no way to completely predict how one of these projects is going to turn out, these tips can help anyone interested in fixing and flipping to try to avoid the most common setbacks.

1. Asbestos- Asbestos was a common material used in homes built before the 1990s. It can be harmful if bothered, but is generally safe if left unbothered. If you find asbestos when you start digging into a wall or floor, you will need to get it removed, which can be costly. Keep this in mind if you are buying an older home.
2. Mold- If you smell mold, see mold or see moisture in a home before you buy it, just plan on there being mold in there. Mold has to be professionally remediated and is expensive. So avoid buying a house with mold or account for the extra costs into your budget.
3. Termite Damage- A termite test is only about $50 and can be done during your inspection. It is smart to do it. If you do happen to find termites when you start your repairs, you can end up spending thousands.
4. Load Bearing Walls- Open concept is super popular, but don’t assume all of the walls in the home are easy to take down. Many walls are actually load bearing and you will need an expensive beam to be put in the wall in order to safely remove that wall. These are thousands of dollars, sometimes more. So, proceed with caution, or have a backup plan.
5. Old Electrical- If you see knob and tube wiring in a house or what looks like outdated electrical, it can end up costing you a lot of money to get this electrical work up to code so you can safely resell the home. Electrical work is one of the biggest unexpected expenses that can ruin a budget.

The best thing you can do when fixing and flipping properties is to make sure that you over budget for repairs and renovations, and keep your potential profit margins as big and as open as possible. The more room for leeway you have the better, and the less likely your new flip purchase will end up being a major flop.

Fix and flip properties are becoming a very popular investment for people who want to take a little bit of a gamble, and hopefully make a lot of money in the process. However, fix and flips are much more complicated than they first appear. You need to renovate the property in order to get top dollar, but there is also such a thing as over-renovating. You need to make sure that you are only spending money on upgrades that actually add value.

Remember, your goal is to spend as little money as possible to make as much money as possible. Here are a few ways to make sure you that you are adding value to your fix and flip.

  1. Remember the golden rule. There are three things that determine the value of real estate: location, location and location. This has always been the rule and will always be the rule. If you buy in a good location, for a low price, you are already ahead of the curve, no matter what improvements you make. There is no better “value add” than a great location.
  2. Keep the comps in mind. It is really easy to over improve a property. You may spend all this money for higher end upgrades and end up with a home that is pretty, but overpriced given the neighborhood. This is not adding value, this is just spending money.
  3. Don’t limit your buyers. There are plenty of ways you can spend money in a home to add things, but in the meantime you may end up cutting out some of your potential buyers. If you really want to add value to the property, you need to make it appealing to as many people as possible. So, don’t be buyer specific with what you add.
  4. Make a strong first impression. Curb appeal is huge and it is worth spending money on the exterior of the home in order to have better curb appeal. Paint the front door a bright color and plant flowers and plants outdoors. Upgrade the exterior lighting and consider a new mailbox. However, this isn’t the only first impression. The interior of the home needs to make a strong first impression as well, so spend a little extra really sprucing up the entry way to give buyers a great first impression of the home.
  5. Kitchens and bathrooms sell houses. If there is anywhere in the home that you are going to spend money, it should be the kitchen or the bathroom. These are the two areas in the home that are going to be worth spending money in. They may be a lot of money up front, but they have a great return on investment.

Keep these tips in mind as you start to renovate your fix and flip and remember that you goal is always to add value with every dollar that you spend.