REI Success Mastery

It is no secret that America is facing an unprecedented foreclosure crisis. But, what happens to all of those foreclosures if no one buys them at the auction? Well, the banks have to take back the properties, and they become Real Estate Owned, or REO. Contrary to popular notion, the banks do not want to take these properties back. These properties become non-performing assets for the bank, and hinder the bank’s borrowing and lending powers. Because these properties propose such a negative situation for the banks, they become very motivated to sell off these REO properties. Since the banks are motivated sellers, they are often willing to accept deeply discounted offers for REO properties. This presents an incredible opportunity for real estate investors to buy properties for prices far below market value.

It is often a good idea to focus on REO’s that have been back on the bank’s non-performing asset list for more than 90 days*. If you try to negotiate a discount with the bank before 90 days*, you could face more resistance from the bank. Also, there is a very small group of realtors in each area that are able to market REO listings. It is crucial to find out who these realtors are in your area, and contact them if you want to excel in purchasing REO properties.

Here is the second installment of what to look for when buying a house. Make sure to check out all of these important parts of the interior of the house.

1. Flooring

Carpet: It is almost always recommended that you replace the carpet. New carpet is a good selling point amongst realtors, and therefore worth the investment. But, remember to shop around for the best price.

2. Walls

Drywall is fairly inexpensive, so holes in walls are not as big of a problem as they seem to be.
3. Kitchen

• Instead of replacing cabinets, which can be costly, put in some elbow grease and strip, paint, and add new hardware. You will save a lot of money, and they will look like new.

• Appliances

• Counter tops

4. Bathrooms

• This is very important room for many people. This is also a room where mold can accumulate and damage can be done. Because of this, it is imperative to do a full inspection. Check the shower, and check for mold. To avoid missing damaged areas, get on your hands and knees and check every area of each bathroom in the house. You will be happy that you did.

• How many bathrooms are there?

• Shower/Tub : it is not necessary very often to replace these. However, resurfacing them can make them look like new.

• Is there mold?

• Sink/vanity: Nine times out of ten, you should replace the sink and vanity.

• Toilet: Nine times out of ten, you should replace the toilet.

• For less than $500 you can make a bathroom look brand new.

• If you make the kitchen and bathroom look brand new, your house will sell with fewer days on market.

5. Bedrooms

• Legally, a bedroom must have a window and a closet. You can create your own closet and turn a 3 bedroom home into a 4 bedroom home. However, you may need a permit for this, depending on the electrical situation in the house.

• How many bedrooms are there?

• How many closets are there?

• What are the sizes of each bedroom?

6. Basements

• Fixing up basements can add much value to a home, and help it to sell faster. You will need a permit to do this, however.

• Usable square footage of a basement (and sometimes attics) is determined by ceiling height. To be considered a finished basement, the ceilings must be 7 feet high.

• In order for basement space to qualify as a bedroom, it must have a closet and an egress window. An egress window is a window that one can crawl through. This relates to fire safety.

7. Other items

• Air conditioner

• Furnace

• Water heater: New water heaters draw in buyers, and they only cost $300-$400 to replace. It is also a good selling point if the water heater is high efficiency.

If you look for these elements in a house you are looking to purchase, you will be on your way to determining how much it will cost to fix up, and if it will be a good investment property for you.

Whether you are considering buying your first personal residence, or your first investment property, there are a few key things to look for when purchasing a home. They may seem like common sense, but doing your due diligence on each and every property will save you money. Careless mistakes are made every day, and it is better to be prepared and informed than to lose money on a deal.

First, we will explain the things that you must thoroughly inspect on the exterior of a house.
• 1. The roof: Make sure that the roof is in good condition. Roofs can be extremely expensive to fix, and can greatly increase your rehab costs.
• 2. Windows: Windows are one of the biggest selling points on houses today. Potential buyers will be more impressed with double-pane, vinyl windows than single-pane wooden windows. (*Remember, as an investor you want to spend money fixing things that will help sell the house. However, don’t forget that you will not be living in the house, and every item does not have to be up to your standards of living. A big mistake that new investors make is putting too much money into rehabs that they will not get back out once they sell the home. Make your investment property just a little bit better than the other houses on the block so that it will sell. Make it appropriate for the neighborhood.)
• 3. Siding/Wood/Brick: Check if any of this will need to be cleaned, repaired, or replaced.
• 4. Foundation: this is hard to inspect when people are living in the property that you would like to purchase. A good test to see if there are major foundational problems is called “the marble test.” To do this test, stand at one end of the house and put a marble on the floor. If the marble rolls down at an angle rapidly, you know there are major foundational problems, and this property could be more of a challenge than it is worth.
• 5. Landscaping: curb appeal can help to sell a house! (As an investor, you must always consider your exit strategy.)
• 6. Central Air: if the property you are interested in buying has been sitting vacant, make sure to check if the outside central air conditioning unit is still outside. People like to steal these, and you do not want to have to pay to replace this.
• 7. Garage/carport: the size of the garage is a “deal breaker” for some people. If they cannot fit their car inside, they will be unlikely to purchase the home.