the best way to mitigate — but not eliminate — the risk. Your due diligence period is KEY!!
WHICH HOMES TO BUY
While some investors might look at For Sale By Owner (FSBO) properties, many others focus mostly or completely on purchasing bank-owned properties. Some go to sheriff ’s sales or other auctions. But what type of properties should you be looking for? 1) Distressed/Outdated properties; 2) foreclosures; 3) short sales; 4) and REO/Bank-Owned properties. Let’s take a look at each of these options in more detail.
Distressed Properties
Owners of distressed properties tend to be pretty desperate or motivated to sell, which means investors can often buy these distressed properties for less than their current market value. For these types of properties, homeowner's typically have a hard time selling to a buyer who will be closing with a traditional FHA loan. The properties are usually in very rough shape, and will typically not appraise in their current condition. These homes need A LARGE AMOUNT of work done to the property to make it livable! This is where an investor comes in handy! Being able to put the home under contract as a cash buyer, or even with a loan from a Private Lender, makes these purchases go much smoother. For example, if an investor gets a home under contract for $60,000, the house may need $40,000 to make it worth its maximummarket value of $140,000 after being repaired. A home needing that much work is typically not livable in its current situation! These are GREAT properties to buy and invest in.
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