Every real estate investor revels in the joy of unearthing that good deal. You have done your due diligence, the numbers seem to work out perfectly, and you can play the exit strategy perfectly in your mind. It’s a dream.
In crushing-back-to-earth reality though, not every deal is like this. It’s a bag of mixed fruit: you’ll encounter lemons; you’ll encounter peaches.
However, when deciding on an investment property, there are certain properties that tend to lean more towards peaches than lemons. These properties usually have one thing in common: a motivated seller. A seller who wants out of a home. A seller forced by circumstances to vacate the premises. A seller willing to take a lower offer.
The following three types of properties qualify to fall in this category, and they are the kind you should be keeping an eye out for.
The seller, in most cases, is not emotionally connected to this type of property. There could be a myriad reasons as to why it has fallen vacant, but more often than not, the property is a money drain for the owner. It is neither providing a roof over someone’s head, nor creating any cash flow.
If anything, the owner is going back to their pocket to keep it in good condition, something s/he may or may not always do. Never mind the issue of property tax.
The lack of routine maintenance and upkeep means it’s not easy to tell what needs repair and what’s falling apart.
The longer a home stays vacant, the more likely it’s going to become a distressed property. A distressed property is one that either lacks enough care and love invested in it, or enough money to maintain it.
Depending on its condition, a distressed home could either call for extensive repairs or just minor renovations to spruce up its look.
Whenever you find yourself viewing this type of property, make it a point of estimating how much repair will go into it. If you can’t place a good enough estimate, it’s never a bad idea to bump up the figure for any unexpected costs that may come up.
Know what the seller is expecting in their ideal offer, then explain the amount of repair that will go into it and the best you can do considering the condition of the house. You’re not out to fleece them, so back up your reasoning and be considerate and reasonable during your dealings.
As much as you may be out to make a profit, it’s good to understand that the seller may be going through trying times in their life. And should the numbers look happy for both of you, you could just end up being their solution.
Probate properties are almost always a sensitive affair. In many instances, you will be dealing with a family member who just lost someone close. This is why you should be compassionate and understanding.
Probate property sellers will always differ. There are those who will be looking to cash in on the property quickly, while others may take a while to absorb the whole idea of relinquishing the property.
The family member in charge of the estate may or may not live close to the property, and could be willing to take a lower offer just so that the matter is out of their hands. It will depend on the situation.
The right type of property alone is not enough, unless you are the only buyer who’s privy to it. The thing is, the less buyers eyeing it, the better.
Properties being advertised or listed on MLS have a good chance of receiving multiple offers, especially if the market condition is in good shape. The trick to landing a good deal is spotting it early. A property that hasn’t been actively marketed as yet presents the best chance of having your offer considered.
At the end of the day, every market is different and these three properties are not unique to any particular market. You can always find one if you look in the right places.