The easiest way to find foreclosures in a particular area is on the internet. A Google search for foreclosures and an area will provide you with lots of leads. If you are looking locally for foreclosures coupling driving around with a Google search will provide even more information. You can also look up information on foreclosures in county offices in most states. A combination of all three will provide you with many candidates. Try to get an asking price for each property.
Winnowing The List
The next step is to use the asking price (for analysis purposes), taxes, assume an interest rate and estimate insurance costs. Add all of these to determine a monthly payment. Add 25% to 30% to this to get a reasonable rental price. Next couple each property with the bank that owns it. A Real Estate agent can help you with this process but remember, you need to pay the realtor a fee at the sale. If you deal with the bank directly, no fee is required.
Negotiate with the Banks
The next step is to negotiate with the banks. Use your analysis for rental costs to make sure that you can stay within your cost parameters. Explain to the bank why you must have the property at a specific price or lower so that the property will cash flow. Once you have determined a price negotiate a mortgage rate with the bank. This process should be repeated for each of the properties on your list. This may take some time, if a property you negotiated is sold by the bank before you complete your selection process, don’t be concerned. This is investment property not something that you will live in. Think of it as a stock, there are always more to look at.
Pulling The Trigger
At this stage of the game, you have all of the hard numbers that you need. Now you must consider some of the qualitative factors. Where is the property located? Is the area desirable? Are there many foreclosures in the neighborhood? These are some of the factors that I use to make a decision. Use your own judgement. Also if you are buying two properties, should you get two medium priced properties or there lower priced properties.This part of the decision making is usually up to your own personal preferences. If you hired a Real Estate agent his or her opinion should be sought out. In any event, het off the dime, make a decision and get started!