A good way to locate distressed properties is to go down to your local city hall and visit your city or county building code enforcement agency.

Introduce yourself, let them know that you are in the business of real estate investing. Tell them you are interested in distressed properties and that you rehabilitate these properties. Discuss with them their files on condemned buildings or properties that have multiple violations.

Don’t be shocked when they have no problem showing and discussing this information with you.

Once you have this information contact the owners and discuss possible deals.

This post is going to go into a new category titled “Ways To Locate Bargains”

Hans Anderson

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1. Know your financing options. Different lenders have different products as well as rates. A mortgage agent will find you the best product and rate.

2. Don’t confuse an appraisal with a home inspection – you need both! An appraisal determines the worth of the property by estimating the market value of the land and building. A home inspection inspects the adequacy and condition of the building and all major systems.

3. Place conditions on your offer. Conditions provide you with the flexibility of withdrawing your offer if you are unable to obtain the necessary financing, or if the inspection reveals structural problems with the property. Even with pre-approval, Investors who make an offer without conditions do so at their own risk. continue reading>>.

Hans Anderson

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Your team of professionals becomes very important when evaluating deals in your area. Your real estate agent will be able to provide comparable properties for the investment property you are interested in.

The real estate agent will use the MLS listings to compare similar properties that have been sold in the last 6 to 12 months. Obviously the closer the comparable properties date is to the present time, it will show a more accurate reflection of current prices.

When doing a comparable lay the information out in front of you and then figure out what amenities one property has that the other properties don’t. You then add or subtract value of the amenity or lack of it.

As an example lets say we have two properties that are very similar. Both properties are the exact same in every way except one has a two car garage and the other has no garage.

The property with the garage sold 6 weeks earlier for $85,000. The other property without the garage has an asking price of $80,000. We now know that a two car garage would give the property an extra value of $5,000 and that the property without the garage is priced accurately.

Make sure you get a home inspection or a very reliable handyman to go over the property and get a preliminary title report as part of you property valuation.

Create a financial analysis of the property. Once you have established the fair market value of the property multiply that amount by 70%, then subtract your estimated costs for repairs. Your total would be the price that you would offer. Try to get a 20% profit (more is okay).

To calculate the offer price on the $80,000 property (fair market value).

$80,000 x 70% = $56,000

Now we will say that the repairs are $6000, subtract that amount from the $80,000.
For this property our offer would be $56,000-$6,000=$50,000. If you put in an offer of $50,000, your profit would be $30,000. A very nice profit.

Hans Anderson

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The one thing you have to remember is that real estate investing is not a get rich scheme.

You have to take it one step at a time or one property at a time. Each day will bring you closer to your real estate goals.

Don’t be afraid to make mistakes. Mistakes are proof that you are moving ahead. Learn form your mistakes and carry on (soldier on)

In this business you will be turned down far more then you will succeed. But if you are persistent you will be successful.

Failure comes before success.

Hans Anderson