Are You Knowledgeable Enough to Buy an REO Bank Foreclosure? (Part 3 of 4)

Do you have what it takes to buy an REO bank foreclosure in Myrtle Beach?

Buyers of REO bank foreclosures must be Qualified, Prepared, Knowledgeable and Patient. If you have lined up your financing (Qualified) and narrowed your search to two or three neighborhoods (Prepared), the next step is to do your homework (Knowledgeable) so that you will know a great deal when you see it. [This is the third of a four part series.]

My buyer [see part one] could make a quick decision on his great deal because he knew the neighborhood, he knew the market, and he knew what it would cost to rehab the property. He had done his research well in advance… and knew a great deal when he saw it.

• KNOW THE NEIGHBORHOOD – You’ve narrowed your search to a particular neighborhood, but now you have to dig deeper. Determine which properties in the neighborhood interest you.

Answer these questions: What distinguishes one home or condo from another? Which locations are most desirable? How much are the taxes and association fees? What can you expect for net rental income? Which properties will have the highest resale value?

Tip: Compare property sizes and prices with net rental incomes. In general, you will find that smaller properties will work out better.

• KNOW THE MARKET – You know what you are looking for; now research the sales price history on these properties. At this point, you will need help.

That’s where I come in. Access to most of the pricing information you need is through a paid MLS service that is restricted to Realtors. I have research capabilities at my fingertips that are not available to you. And I can set you up to receive email alerts of price changes and new listings that fit your search criteria.

Tip: On REO bank foreclosures, you’re looking for the bank to make a major price cut. And when it comes, you’ll know about it.

• KNOW REHAB COSTS – Banks sell their properties “as is”… which means they won’t fix anything that’s wrong with the property.

If you are looking for a single-family home, a professional home inspection is a must. You need to know if you are getting into any serious problems. Your offer can be made contingent on your approval of the home inspection. Then you need to know what it will cost to make the property “rental ready?”

Condos are a little easier in that, ordinarily, you are only responsible for the interior of the unit… you depend on the property association for exterior maintenance and upkeep. Paint, carpeting and furnishings are typical condo rehab expenses.

Tip: You need to know, in advance, the typical costs of rehab. This is where experience comes in… I have a list of typical rehab costs you might run into.

You can see why buying an REO bank foreclosure is not for everyone? Your finances need to be in order; you need to know what you are looking for; and you need to do some in-depth research so that you will know a great deal when you see it.

If you are still with me and you’re thinking: “I can do that!” CALL ME (1-888-494-8654) – I can help you with the research and set up email alerts for you. I also have several home inspectors that I trust… and people who can do the needed rehab at reasonable prices.

In my next post, I’ll explain why you need Patience to buy an REO bank foreclosure.