Tips for Investment Properties: Wholesale Homes

If you’re considering investment property for sale in Cincinnati, wholesale homes are a great option. However, if you do not know much about wholesale homes, and would like to foray into buying these investment properties, here are some guidelines and tips to help make your experience the most profitable and enjoyable.  Any venture involving investments is worth careful planning and education, and your diligence will go a long way if you have prepared thoroughly for this exciting investment world. 

1. Think about REO properties if you have the option for them. REO properties are houses that have been foreclosed on, and the bank now owns them (Real Estate Owned).

  • The market for REO properties is hot, as our economy fluctuates and housing market outlooks vary from area to area.
  • REO properties are not listed so prominently, so you will be wise to engage in searching online, looking through a newspaper, and additional research.
  • Negotiations on REO properties, like all negotiations on wholesale homes we go better with a bank when you have cash in hand to pay.

2.  Once you have located wholesale homes you would like to purchase, you should evaluate the investment property for sale using current comps.

  • If you are using the services of a real estate agent, they can provide these for you
  • You can ask an agent for an “as-is” value and an “after repair” value of the home you have selected. This allows you to properly evaluate the deal, as well as market a wholesale house if necessary.
  • Actually go to the home. Many people wanting to break into the wholesale home market trust strictly in the numbers when it comes to their investment properties; those who are successful in wholesale homes will visit the property. Not only do you get a better feel for the deal but you can better assess any damage as well with your own eyes before sending in your contractors for an additional opinion.

3. Getting a good estimate on the repair or rehab costs of the investment property for sale is paramount.

  • Having a list of things to check when walking through home for the first time will save you a few sleepless night trying to remember if you missed anything.
  • Once you have evaluated the costs of repair or rehab of your investment properties, it’s a good idea to add an additional percentage to your budget to count on when it comes to unexpected issues in the investment property for sale. If you’ve done your due diligence on the estimated repairs and have been honest with yourself the worst that could happen is that something small and unexpected might arise that you can immediately cover. The best thing is that you will make a little more profit than projected.
  • If you are using a contractor have them meet you at any wholesale houses you are planning to buy. His estimates might not be the same as yours, so being on the same page from the beginning requires some communication.

Repossessed Homes; What You Must Know

As a real estate investor, you have a number of options to consider when it comes to investment properties, but have you ever considered repossessed homes in Cincinnati, Ohio?

What are repossessed homes? Are they cheap houses? Can you use them for real estate investment success?

Repossessed homes can be cheap homes. They are homes that have been sold at a price cheap than market value by a lender, because the owner defaulted on the mortgage. They are also known as foreclosures. You can absolutely use them for real estate investment success.  They are a worthy investment choice if you can get the cheap houses for the right price in Cincinnati, Ohio.  If you are new to repossessed homes, here are a few facts you must consider regarding these investment properties.

RealtyTrac reports sales of repossessed homes and foreclosure homes made up 21 percent of all United States home sales in 2012. Short sales made up 22 percent.  Combined, this equal 43 percent of property sales in 2012! So while these homes can be cheap houses, here are a few facts you need to be aware of, so you can get the best deal on these investment properties in Cincinnati 

1. Transfer fees – When purchasing repossessed homes, an investor is able to save on transfer fees. Buying a property at market value doesn’t just mean you’re paying market value for the house. You are paying affixed price plus transfer fees, registration fees, and others that may arise.

2. Eager sellers – Banks will be very eager to sell off their REO – Real Estate Owner – and this includes repossessed homes. They want to find buyers as soon as possible and close just as quick to get rid of the investment properties faster. However, sometimes it’s not a quick process, so do be aware of this fact. You may be looking at a time period of one month or more in waiting.

3. Possible damage – The news has often reported stories of former homeowners who are reluctant to leave their homes. They engage in acts of destruction to the property, and leave it needed much repair.  One case in California had a couple causing one hundred and sixty thousand dollars of damage to their home when it went through foreclosure.  In other cases, a homeowner may have been simply unable to afford the upkeep of their home and it fell into disrepair quickly. You may be looking at a costly renovation. Look over the house diligently to anticipate if you are up to the challenges. Cheap houses are cheap for only so long.

4. Legal fights – Sometimes a disgruntled tenant may refuse to leave from the place after you have purchased it.  This will necessitate a court battle which could cost you precious money and time. Sometimes you may encounter squatters who need to removed with help from the law. With repossessed homes, anything can happen.

Repossessed homes are cheap houses that can be a gold mine for real estate investors, provided they use common sense and financial knowhow to figure out whether it’s a good “risk” for them.  For more on repossessed homes and to see all our investment properties, keep visiting http://royalfrogrealestate.com

 

Avoid Getting Stuck With Costly Foreclosure Homes

Foreclosure homes are great investment properties to pick up right now, but how do you make sure you do not hit any significant bumps in the road?  Here’s a quick set of tips for navigating the purchase of these cheap houses.

Prices of foreclosure homes vary but have a few things in common: they’re below market price, and sometimes they’re really great homes. The economy has forced many homeowners into foreclosure as they are unable to pay their mortgages and lenders want their money. Before you go rushing into buying these investment properties because they can be cheap houses, use caution and heed these tips.

First you must inspect foreclosure homes before you purchase any of the investment properties. If you are able to inspect a home before you pay for it, do so. While there may be homes out there that do not need many repairs, you are wise to inspect a property so you have an idea on the strains it will place on your budget. You don’t want to rush into buying investment properties without these considerations, then be stuck with a large rehab project and a small budget. You do not want to be stuck waiting to make repairs because of your hastiness

You will need to look at the property personally, do not rely on pictures online, because a picture will not show the full scope of the property’s needs and features. Some investors rely solely on their impressions based on a property shown online, then realize the property is nothing like the picture after they have purchased it.  You may have a real estate agent representing you as well, but try to personally visit the property to see if it up to your standards.

Foreclosure homes are available throughout Cincinnati and the country. The price of these investment properties can be mighty tempting, however, an investor needs to do their research on the neighborhoods the cheap houses may be located in.  Some houses will be in crime-ridden areas, or areas not suitable for families. Some may be far from public transport, grocery stores and other conveniences. If you end up purchasing foreclosure homes in areas such as these, it may take awhile for the property prices to appreciate, so be aware of the houses’ surroundings, as they can affect the price.

Some foreclosure homes may have been left vacant for years, and it’s recommended that you get every inch of the building inspected to make sure the plumbing and electric systems are fully functional. Make sure there’s no leaks in sewer and water lines, that the faucets and showers are operational and fit to use. Beware of houses that have sat for years without being winterized: pipes may have cracked, which can lead to mold. Also the repairs may be costly.  Check houses thoroughly to ensure you find a real bargain without issues!

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Wholesaling Homes + You Can Equal Big Profits

Seasoned real estate investors who are experienced in buying and selling investment properties in Cincinnati are usually aware of the profits that can be made with wholesale homes.  Wholesale homes are investment properties that homeowners are open to selling to a buyer at a cheaper price, that is less than the retail or market price. The investor then locates buyers for the property and sells it to their interested buyer, thus create higher profit margins.  While a wholesale house can be lucrative, a beginning investor faces two challenges.  One, they must find a wholesale house and two, they must find interested buyers for said homes.

Buying a  wholesale house, like any other investment properties, take experience, time and hard work. There is a learning curve and having patience is worth it.  Your starting point with wholesales is to find sellers who are interested in selling their home at a negotiable price.

The following sellers and scenarios are best when you are looking for a wholesale house in Cincinnati.

    • Families who are planning to relocate or leave the country, or those who are in financial aid will be eager to close deals on their homes with less hassle than the open market.  The right advertisements – bandit signs, Craigslist ads, car magnets – may get you several calls from eager sellers
    • Investors with property that hasn’t been sold on the market yet. They may want to get rid of it and move on to their next deal, so these individuals will typically be eager to work with other investors
    • Homeowners whose properties have gone into pre-foreclosure.  Because they want to get a price that they can agree with before the banks come and put their home up for short sale, these sellers will be open to negotiable prices
    • Homeowners stuck with more than one mortgage may be willing to cut a deal that can give them a fair price for their properties

Finding buyers for your newly-obtained wholesale houses is not as tricky as it appears to be, since the prices of the wholesale homes will be less than its competitors’ on the open market.  Consider this scenario:  A wholesaler purchases a house for $100,000 and sells the home at $120,00. The price will be attractive to buyers if the current market trend is $200,000 for a comparable home in the same area. These wholesale homes can sell within a day if the price is right.

The key to sell wholesale houses is to make the sales as soon as you are able.  The best way is to place the house on the market the same you buy it, and make the deal even if the profit margin is a little less.  Investment properties and wholesaling homes takes experience and with time, you can generate steady revenue to invest in new properties. Every time you sell a house, you gain valuable knowledge and expertise on market trends, pricing flux, and identifying great properties. You also educate yourself on the most-desired neighborhoods of a city and the bad areas.

You can learn more about wholesale houses and other investment properties at http://royalfrogrealestate.com and join our buyer’s list to see our handyman specials and rehab deals throughout Cincinnati.

 

Tips for Success in Real Estate Investment Properties

When you look at the possibility of success in real estate investing, consider rehab deals. Now what exactly are rehabs and what some are tips for profitable rehab deals?

First, we need to define rehab. Rehabbing is a term that describes the practice of purchasing real estate at less than the market value, aka rehab deals. These investment properties are also called handyman specials.  These cheap homes typically need work, and after a rehabber improves the property, they usually resell it at a high price – often near market value – and make a profit.

Buy cheap homes

A common mistake for many first time rehabbers is paying too much for a property, because they are anxious to succeed with real estate investing right off the bat and might be blinded by the idea of big profits. It doesn’t make fiscal sense to buy a retail property, improve it, then try to sell it at a retail price. You will most certainly come up with a loss. Retail properties are usually discounted by the same price as the rehab, thus ensuring you probably will not be able to make a profit.  You will need to buy your property directly from a seller or on the wholesale market to have a sufficient margin for profit. Cheap homes and handyman specials in less than retail condition are a good venture.

Estimate your expenses

It is crucial you estimate the cost of repairs for y0ur handyman specials for your profit. The best way of learning how to estimate rehab costs properly is through experience. It is advisable to start with simple ‘carpet and paint’ handyman specials, since these costs can be estimated easily. You might not make very high profits, but your risk is going to be much lower and you will have made your first foray into investment properties. In addition, remember to estimate the carrying costs, closing costs, sales and insurance expenses on your cheap homes.

Finance the deal

You will have several alternatives for financing a rehab property, each with its pros and cons.  You must weigh them to see what you would like to choose.

  • Cash – Buying rehab houses in cash is the least tricky option. It is also the least expensive because there are no carrying expenses or loan closing costs. However, this option is out of reach for many new investors. Based on the cash available, buying in cash can also limit the number of rehab deals one can undertake at the same time.
  • Conventional loan – Using a conventional loan to finance rehab deals comes with its own challenges. First, it is unlikely that you will find a loan which will cover the property as well as the rehab. Most likely, you will have to pay for the rehab costs in cash. Secondly, you might have a problem getting a loan for a property which needs extensive rehabs, because lenders won’t lend on properties deemed as ‘uninhabitable’. It might also be difficult for your buyer to access a loan on the property. However, there are some exceptions to these generalities.
  • Hard money lenders – These lenders specialize in lending to rehab investors. They are referred to as ‘asset based lenders’, meaning that they lend on the basis of the deal, rather than credit or the investor. Such loans are usually up to one year, and require monthly payment of interest.

Find cheap labor to work

Obviously, the cheapest labor for your handyman specials available is you. If you handle the work yourself, then the profit margin will be much higher. However, you will only be able to rehab one property at any one time. Remember also that the longer it takes to complete your rehab, the higher your carrying costs.

If you decide to hire a contractor, begin by getting many bids. This is a perfect chance to learn what repairs need to be done, since they will all have differing views. It might take a while, but you will eventually identify good, cheap contractors.

Learn more about investment properties and handyman specials at RoyalFrogRealEstate.com and see all our properties by joining our buyer’s list! Handyman specials and rehab deals not listed on the open market!

 

 

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Important Steps with Rehab Houses

Working with rehab houses in Cincinnati is a popular investment choice, as more investors turn to a way to get solid and steady cashflows concerned about the uncertainty of the stock market.  Cheap homes are a much cheaper and ideal way of cash flow instead new homes, particularly if you want to be a landlord and maintain a steady stream of income.  When you’re looking at investment property for sale in Cincinnati, there are a few things to keep in consideration.

First, the cheap homes must be good investment property. This is obvious, but consider if this property is worth putting time and effort into. Once you’ve decided that, you need to begin to take the first steps towards work on your rehab houses.

If you do not have anyone to perform work on your new property, you must locate a contractor. You make use a contractor recommended by a friend or fellow investor, or you may take bids and let several offer you a price based on the scope of work.  You need to use reliable contractors and be sure to check references, see if they have any online reviews, etc. These workers will be responsible for the outcome of your property and it’s going to be investment property for sale eventually in Cincinnati, you will want to have the best work you can buy.

You can also search online for various options for  handyman services such as window installation, floor specialists, painters, etc. If you want to get the best job done, do not take the research process lightly, because doing so might not make the process smooth and easy.

Consider every aspect of the investment property for sale. Cheap homes start out cheap until work gets performed. You need to look at each aspect of the home and consider how it fits into the idea you have.  If you’re wanting to work on rehab houses in an area with a huge population to families and near a school, maybe consider adding a breakfast nook or anything else that would appeal to families, such as a furnished basement that would serve as a playroom or media room. Be sure to consider the cost of fixing something now such as an older carpet compared to the cost of replacing it later if you’re renting. It might be easier to put in a new carpet than to keep the same old one. Another factor to consider is the green one. Energy improvements can go a long way in making the house stand out to a buyer. Even modest improvements such as a high efficiency appliance can make a difference.

Be smart about rehabbing things in a good order! Consider the steps you’ll take for each aspect and feature of the home, going room by room and listing what needs to be done. You do not want to let one repair mess up another, such as painting the walls a bright blue after you have installed your brand-new hardwood floor!

A good rule of thumb when rehabbing houses in Cincinnati, think “what would I want in this home if I were to live here?” – this doesn’t mean you need to put restaurant quality kitchen appliances, but think what would make this house feel like a home.

For more advice on rehabbing homes, visit http://royalfrogrealestate.com!

 

 

 

Video: 7 Mistakes Rehabbers Make and How to Avoid Them

I’ll be talking more about this topic in my FREE seminar on February 4!  Sign up now!

Determining Prices on Investment Property in Cincinnati

I’ve got a valuable video discussing how you can determine and estimate your maximum price you can pay for a rehab deal or investment property. When purchasing handyman specials and cheap homes, there are several factors to consider, and I discuss them in my informational video.

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