How To Buy Houses At A Discount

finding houses at a discount

When trying to get into the real estate investment world, there are actually several ways to get involved and make money from properties.

What people unfamiliar with the industry might not realize, however, is the importance of buying houses under its market value, and just how much under the market value they need to pay.

Investments in real estate really need to be treated like a business, so that means the numbers have to make sense.

That means purchasing a home at the right price — knowing what the value is, what the repairs are going to cost, and negotiating a purchase price that will account for everything and leave room for profit.

What we’re going to do is go over some of the methods that will let you find houses that will match the right numbers.

Purchasing a house that’s going through foreclosure

On average, houses in foreclosure sell for about 28 percent less than houses that are not in foreclosure. The bank holding the mortgage often auctions a foreclosed home(wikihow.com)

What this means is that there are actually two ways to purchase a home that’s facing foreclosure.

The first is by attending the auction and bidding against others to purchase the property.

This involves doing your research and really knowing the area, the property’s value, it’s estimated repair costs, and what you can do with it (remember, it needs to fit the numbers).

The second is by finding homeowners that are facing foreclosure but the home hasn’t gone through the auction yet.

These homeowners are financially struggling and need to get out from under the mortgage debt.

The incentive for them is to salvage their credit (they don’t want to have a foreclosure or bankruptcy on their record for multiple years), and, depending on the amount of equity available, they might even be able to walk away with cash in their pocket.

If the home is worth about $100,000, and they owe $20,000 left, then you can offer $50,000 and they’ll still walk away with $30,000.

This is a lot better than walking away with absolutely nothing when the home is foreclosed and auctioned off.

The challenge with foreclosure homes is that everyone knows about them, since they are publicly listed on foreclosure lists for the county.

Purchasing homes that have been inherited

When a family suffers a loss of a loved one, they inherit their assets.

Children often inherit the homes of their parents, which means they have to figure out what to do with it.

In many cases, holding on to that home is more of a hassle than anything, so they want to get it sold.

But if the home wasn’t already in good condition, then they’d have to spend more money out of pocket to get it up to selling-par.

That’s where you come in —

Approaching inheritors and offering to buy the inherited home with cash is one excellent way to get a discounted home.

Legally, buying an inherited home isn’t that different from buying any piece of real estate(sapling.com)

You’re also doing them a favor, since they don’t want to spend the time or money on the home, you’re taking off their hands and they’re liquidating the property into cash that they can use for either themselves or settling things for the family member they lost.

Inherited, or probate, homes aren‘t as public as foreclosure lists, so there are fewer people that go after them.

In fact, there’s usually a lawyer involved that’s handling the inheritance case for the family, and they often refer their clients to someone that can help them out with their homes when the clients are already prepared to sell it.

So, it would be beneficial to start networking and building relationships with probate lawyers so that you can be their go-to when they refer out properties that need to be sold quickly.

Looking for vacancies

Here’s the traditional method of finding discounted homes —

Finding homes that appear to be vacant, whether they are boarded up, it’s a severely damaged house, or it just looks like no one has lived there in a decade.

Generally, you’ll do the good ‘ole tried and true method of Driving for Dollars.

You drive around town, or certain neighborhoods where they are likely to have vacant or abandoned houses, and you make a note of the address or whatever damage you suspect to be present.

From there you can access county records to find out the name of the owner and any supplemental information.

Once you have that, you’ll be able to do what’s called a Skip Trace, where the owner’s contact information is found and that will give you the ability to get in touch and see if they’re willing to let go of the property.

This is a numbers game

You’re going to have to go through many homes before you find deals, but the benefit is that these are homes that sometimes no one else is pursuing simply because they haven’t found out about it yet.

In many scenarios, it’s all about who gets to the homeowner first.

Finding a vacant home can get you an opportunity to purchase the property at a steep discount, and you’ll have fun turning it into a project home.

One thing to keep in mind is that these are likely to have more repair costs associated with them.

You can get to a house that’s worth $200,000, but the repair costs are easily estimated to be about $50,000-$60,000.

That means you’re going to need to purchase it around $100,000 to make it worth your while.

With houses like this, you also don’t want to skip out on getting a home inspection so that you’re very clear on what issues it has.

The last thing you need is some unexpected surprises that make your costs go multiple thousands over budget.

If you don’t want to look for discount houses yourself

You can always go through a wholesaling company.

These guys are basically people who act as the middleman between buyers and sellers.

Their job is to find the deals and then find a buyer who is looking to purchase it.

They trade their time and money for an assignment fee, and they pair up the buyers and sellers to make a deal, getting their payday at closing with the title company.

What they do is specifically make sure that the numbers work and they will be appropriate for someone who is looking to invest in a rehab project.

Because of that, they’re almost always a discount house and they have already contracted the seller to sell the property, and they’re simply looking to pair up a buyer with it.

If you’re interested in going this route, we have some information on how to find a good we buy houses San Diego company that may be able to help you.

Otherwise, you can look at employing one of the other methods mentioned above.

Just expect to spend a lot of time looking through lists, driving around, and talking to homeowners.

If this is something that you’re interested in doing as a real estate investor, you might have a lot of fun with it.

But if you just want one project house, then you may be better off looking to get something at auction or going through a wholesale company.

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