Investing In Repossessions

Investing In Repossessions
05-27-08
There are many ways to break into real estate. You can buy homes listed on the market with real estate agents. You can find for sale by owner (FSBO's) homes. You can also invest in repossessions. This is one way an investor can generate a positive cash flow in a hurry.

There are many ways to find repossessed properties. Many of them are going to be listed in sheriff sales. Others will be available directly from banks and finance companies. You may find some of these properties listed with real estate brokers. There are thousands out there if you know where to look.

One of the best ways of investing in repossessions is to search and find properties on the HUD and FHA repossession lists. These lists are available on the Internet and through local real estate agents. You can ask for a copy for the entire state in which you live. The lists are then alphabetically listed by city. It is not hard to decipher the listings.

You will notice the address is listed and sometimes even a picture. The listing will tell how many bedrooms and bathrooms are in the home. These properties are all listed in "as is" condition. This means what you see is what you get. You will want to look at the properties before you decide to put in a bid.

You can tour the homes with the assistance of a real estate agent. The agent usually knows nothing about the property other than how long it has been on the market. This is a good thing to know. When a property has been on the market for quite some time, it will make it easier to negotiate a sale.

Investing in repossessions can generate a very good income if you approach it properly. Many people do not realize the price listed is negotiable. There have been homes which have sold for as low as $500 in some areas. There have been properties listed for as little as $8,000. Some of these have sold for as little as $3,000. It just depends on the market in your area as to how low of an offer the HUD office will accept.

Investing in repossessions is not just about how little you can get the property for. You must be able to justify the purchase. You should not invest in a repossessed property just because you can. You are in this business to make money. The house you can buy for under $5,000 may need $10,000 worth of work just to make it habitable. If you think you can still make a profit on the property after doing the repairs then the investment is worth it.

Another good resource for finding homes below market value is the sheriff sale listings. These properties usually only require 2/3 of the value to be paid to purchase. You can find $100,000 homes for $65,000. This figure can be less if the property is owned outright and being sold for back taxes. There are homes in certain areas which were valued at over $90,000 which were sold at a sheriff's sale for under $40,000. This means there was instant equity in the home.

Instant equity means an automatic positive cash flow. You have the ability to borrow against the equity to fund other home purchases. You could even sell the home in days if you kept the asking price below the market value. For example, the house referenced above sold for $38,000. Listing it for $84,000 puts it $8,000 under market value. It gives the investor a profit of $46,000 minus expenses. This is how investing in repossessions can be the most profitable for the investor.

Mark E. Moebius
Miljonair Homes
Custom home builder St. Louis
3451 St. Albans Rd.
St. Albans, MO 63073
636.300.9000