This article is by Kimbrough (Ki) Gray who has worked with Austin real estate for over a decade.
Foreclosure City has created the perfect
storm in many major cities in the U.S. - the perfect storm for investors to find
great real estate deals, that is.
Large inventories, low interest rates
and homeowners hungry to sell all make certain cities ideal for picking an
affordable home or two. Before you break a leg rushing out to buy that bargain
real estate, however, you'll want to keep in mind the most important factors in
a successful real estate deal.
Location, condition, price and financing
are all consideration you'll want to keep in mind in order to successfully find
and acquire a great real estate deal.
If you're looking to buy rental
property that will be paid for monthly, then you may want to set your sights on
lower-middle-class areas. Most owners who occupy their homes in these areas keep
their homes well maintained.
Although you'll want to avoid obvious signs
of a bad neighborhood, like boarded up homes or gang graffiti, accessible
transportation and recent signs of construction can translate into good income
on rental properties. It is important to note that prospective renters with
children will want to live in areas with good public schools. Neighborhoods
where homes are similar in size and have similar amenities are also preferred,
along with areas where homes are mostly three-bedroom, two-bath or
more.
Homes that are less than ten years old are more favorable, since
almost all of its systems will be current, and no major renovations should be
needed for some time. If considering a home more than 50 years old, make sure
all systems have been updated, from wiring to plumbing. If not, you're going to
be investing a lot of money on repairs.
The ideal situation would be to
purchase a home that does not need repairs; however, there are an abundance of
homes on the market today that need significant repairs, but can be bought at
bottom basement prices. Many are owned by the lender, and are uninhabitable.
Others may not need anything more than a coat of paint or new carpet.
If
you decide to make an offer on a home that you think is in need of repair, make
sure you make it contingent upon the inspection of the home, along with an
acceptable estimate for all necessary repairs.
Price may not be that easy
to determine, since the sale of so many distressed properties have negatively
impacted the sale price of all homes in the area. Bank-owned properties are in
need to be sold, though. Banks are interested in holding property; they are
interested in making money off the property based on interest. Many have been
willing to take a loss on property just to unload it.
Your target on a
bank-owned property would be to offer 50 to 60 percent of the listed price,
depending on the condition of the property. The more work that needs to be done,
the deeper the discount you ask for. That will give you a starting place for
negotiations.
Your final frontier to conquer in your investment is
financing. Fannie Mae may be where you'll want to start on your quest for
financing. Also, check with your local lender. Mortgage brokers often can find
you the very best deals on interest rates and many can be located easily on the
web. Just make sure they are reputable. Ask for all fees in writing prior to
signing anything.