Have you ever wondered why some people always seem to buy properties at greatly discounted prices?
This article will explore three general areas that you can consider examining to look for bargain Real Estate Investment Properties and explain how you can take advantage of them.
1. Tax Foreclosures
Its not uncommon for rich people to leave large properties for their children but without realizing that sometimes the Property Tax levied on the property might be huge and the children end up having to sell the property. Another situation arises when the existing occupants of the property are unable to pay the property tax and a tax lien is then levied on the property. Sometimes the tax authority then orders for a sale of the property in order to collect the money owed to it.
Tax liens attach to the land meaning that when you buy the property, you purchase it with the tax lien attached to it. So you would want to do your sums and scout the potential demand for property in the area before you plunge in and purchase the property. One common strategy is to buy, divide and build, in which you buy a piece of land and then you divide it and build several properties on it and then re-sell it out.
2. Mortgage Foreclosures /Bank Auctions
Mortgage Foreclosures and bank auctions usually go together and occur when an individual is unable to pay for his mortgage. The bank therefore wants to foreclose the property and get the proceeds of sale to pay for the amount outstanding under the loan. Like in most negotiation situations, the more desperate the bank is to sell the property, the better your chances of purchasing a property at a greatly reduced price.
You might want to bring along a house inspector and a property contractor to help you inspect the property before you purchase it. Avoid properties with potential wiring, plumbing and sewage problems unless you intend to spend a lot of money rebuilding the property from the ground up. Property inspection is a presumed part of any Real Estate Purchase contract so you must inspect the property as the law assumes that any buyer would do so even if the property is being auctioned off.
3. Fixer Broken Uppers
Some people are fed up with their homes because things leak and the house looks in a general state of disrepair. If they are really disgusted with their properties, there would be a chance that you might be able to negotiate for a lower price for the property because there is so much renovation to be done. The tip to this is to bring a contractor and/or architect with you to learn all you can about how much it would cost you to fix the problem in the property and resell the property. There are many people today looking for real estate to buy, rebuild and then resell and you can make money from this Real Estate Investment Strategy.
So in other words, you will be looking for run down property that you can spruce up with a minimum hassle and cost. Such properties can also benefit from the economies of scale. By this I mean that once you spend some time examining an area and find that most properties have a similar problem which you can solve, why not purchase more than one property and rebuild several units in the same area at the same time and duplicate your efforts and reduce your effective building cost.
In conclusion, always take your time to explore and examine each real estate deal or property investment that catches your eye and you may be a lot richer for it and be able to get a property at a cheaper price from the market. Always remember that in terms of negotiating power, try not to look too interested and let the more desperate seller reduce his own price. Take some action today towards your investment dreams.
Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author's information with live links only.)