Immediately, the phone bank lit up. We took a call from one real estate investor who said in the past nine months, he had bought nearly a dozen properties for an average price of 10 cents on the dollar. He put in $10,000 to $20,000 in improvements and calculates that he has equity somewhere in the neighborhood of $2 million.
Around Atlanta, you could hear collective jaws dropping at the sound of that. How did he manage to profit so quickly from the foreclosure market? Here are a few quick tips he shared:
- Have access to information. The real estate investor said his wife, a real estate agent, had been on the lookout for properties priced at $25,000 or less. He focused on those, their location, and how much rent he could get from them. He has looked at hundreds of properties.
- Have cash on hand. The real estate investor said he's buying with cash - forget about financing. And, he's buying properties for as little as $13,000.
- A little knowledge about construction helps. The real estate investor is putting some cash into his properties, but not too much and just in the right places. A lot of foreclosure properties are being stripped of everything (like faucets, kitchens, and toilets), so figure out how much you'll have to spend ahead of time to get the property into rentable shape.
- Have your team in place. Your foreclosure buying team should include a real estate agent, real estate attorney, appraiser, home inspector, and perhaps even the contractor you're working with, so you can jump when the right opportunity turns up.
- It's buy and hold, baby. Don't think you'll fix up and flip these properties. Buy with an eye toward holding them for the long run.