Best REO Cities: Where Should You Buy?
June 29, 2009
For many people around NoBullRE.com, they have an interesting dilema:
They have cash, good credit, are excited about this market, but don’t know where to buy an REO property.
Frequently, their emails are bombed several times a week from groups in Atlanta, Detroit, Pheonix, Kansas City, etc, etc, etc with great properties and they just get totally confused. A common question that we get is how do I choose one deal, relative to another. Our advice….. first choose the location where you want the deal.
Without stealing our thunder for tomorrow night’s webinar (sign up here), I will at least share with you how we approached this same question. You see, we had the choice to locate our REO activities anywhere in the country and have decided on one specific location…. and this includes picking a location to add properties to our own portfolio. So why did we pick Tampa over all the other interesting places?
In theory, this question would be easy to answer….. simply ask the question “in which location will a home that you purchase produce the most net profit (combination of cashflow and resell profit)”. If we just pull out our magic genie, should be no problem to answer….. yeah, right.
Given that NO ONE can predict the future, then the next best thing we can do is ask:
What major city has REO properties that are most likely to produce high returns?
To help ourselves determine that city, here is the questions we asked ourselves:
- What cities can we get sub $100K properties that ARE NOT IN WAR ZONES; AND
- What cities can we get good rental income relative to price; AND
- What cities have banks that are NOT PANICKING; AND
- What cities are showing signs of stabalizing; AND
- What cities have professional real estate investors that are bullish (rather than scared).
We have highlighted AND in red because we see a common mistake where people get confused….. they maybe focus on where the get the BEST cashflow or where they get the BEST price. While that may make sense short term, we don’t believe that is how you maximize your returns in this market. In our opinion, you need to find the location and the property where you give yourself the best shot at all the criterion above.
In our webinar tomorrow night, we will be diving into this question and how we answered for ourselves. You may, or may not agree with our conclussions but we believe you will find the approach very informative.
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Why Buy REO Properties?
March 18, 2009
The term REO means “real estate owned” by the lender and indicates the house or income producing property has been repossessed by the lender and already completed the legal foreclosure process. In most cases, the lender is the bank, which is why you hear the term “bank owned properties” or “Bank REO’s”.
The bank becomes the owner of the property after the foreclosure process or an individual if an agreement has reached during the proceedings..
Short Sales may be a great buying opportunity. The major complaint from people is the time involved to get it approved by the lender for the short sale price. The home is normally listed by a real estate agent for a value that they feel is right to bring buyers, and will be adjusted accordingly once the lender has finished a complete home valuation analysis to determine the actual sales price.
The majority of the time the lender approves a sales price below the current market value just to sell it quick. One needs to remember that prices in the first-time buyer range have lots of competition which could make it bidding war.
When a buyer buys a foreclosed property, they agree to take the property on its present condition and accepts all other conditions and agreements that goes with the property.
Since what is owed to the bank it is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. Then the property “reverts” to the bank. It becomes an REO, or “real estate owned” property.
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Who Is "REALLY" Making $ In Today's Real Estate Market?
Our 29,689 Members Tend To Agree...
It's Usually Not The GURUs
Have you ever noticed that every "Guru" real estate pitch sounds the same........
They once were poor, but now are rich working only 5 hours per week, and you can be rich too if you just buy their "can't fail system".
Or have you noticed that every property promote has a can't miss proposition, if you just buy TONIGHT.
At the NoBullRE club, we are huge believers in real estate investing...... but we also know that every approach has two sides: Nothing is perfect.
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