Reo searching - Posted by matt(UT)

Posted by Ronald * Starr(in No CA) on July 02, 2002 at 21:32:44:


In my post for beginning investors–found by putting “beginners success” into the search function on the main bulletinboard forum of CREONLINE.COM or the Carleton Sheets Board2–I recommend finding a style of investing that suits you as an individual.

And choose a strategy that works to extract money from your investment environment.

It may take you a while to see what type of investing will be most congenial to you. You may even need to do a few deals with different approaches to figure out what you like and don’t like.

It is sort of like a student artist who copies paintings of famous artists. And makes paintings of his/her own in the style of some famous artists. And then starts developing his/her own individual approach. Musicians do it to. Early on, the Beatles played Chuck Berry and Bo Diddly tunes. Later on, they produced their own unique style.

Buying a duplex and living in one side is perfectly sensible for many people. You can get better institutional or conventional financing for a personal residence that for income properties. If the rents are high enough, you can find youself paying less than one-half of the cost of the property, the renter paying more than one-half. I started off almost doing this. I bought a four-bedroom house and rented out three of the bedrooms, living in one myself.

The negative is that you are living in a duplex, not a separate single family house. You will be very close to your renters. For most people this is ok. But not all. If it suits, you fine. I hope that you can find rentals that make sense on a cash flow basis. It may be difficult. You may have to look hard for a decent deal. Persistence is the secret of success.

Good Investing********Ron Starr*************

Reo searching - Posted by matt(UT)

Posted by matt(UT) on July 01, 2002 at 21:51:20:

I have a question for any of the Reo investors out there. I have been asking some smaller banks with the hope that they have some REO properties on hand, but none have had any up to this point.
Is it a given that the only way to find reos is through Realtors? or can good deals be found strictly through the banks?

Also, I am interested in buying a home that needs mainly cosmetic repair like painting, carpeting, cleaning, and yard work. I am a new investor and am wondering if you think this is over my head or feasable for a newbie?

Thanks for any advice or help…I appreciate it. Matt

Re: Reo searching - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 02, 2002 at 14:43:21:


REO buying is, it seems to me, a niche market. You will have to devote yourself very strongly on that market to make it work. You need to follow the foreclosures and make an offer as soon as the property goes to the lender, assuming that there is no right of redemption. You should get in good with the agents who handle them–there are probably only a handful. You want to be their buddy and you want to act IMMEDIATELY when they tell you they have one coming up or just listed. Drop everything, look at the property, and, if appropriate, put in an offer. Make them lots of commission money without much work. Consistently. Be a professional. If the property is not right for you, let them know why so they won’t bother you with similar properties in the future.

Now, please recognize that this is not a particularly good time for REO buying. The time to do that is when the real estate markets are cold and everybody is having a hard time selling their properties. The lender/owners are the more motivated sellers. They can not hang on like the homeowner or investor can. So they sell low of market to get rid of the properties.

Sure, there will be a few REO properties, but with hot markets, it is easy for the lenders to list the properties with the brokers and get 95% or more of market value. Which will not be attractive to you an an investor.

If you do continue talking to the lenders, ask them if they have any “turkeys” they can not sell or problem properties. Try to be a creative problem-solver and figure out how to solve the problems of these nonselling parcels. At a profit to you, of course.

Good InvestingRon Starr*****

Re: Reo searching - Posted by TC

Posted by TC on July 01, 2002 at 22:20:08:

-Try contacting the bank’s ‘Mitigation Dept’ that is grand central of REO’s in my area.
-R U a handyman? if not, do what U can & hire the rest, do your homework on cost comps. It’s a numbers game,do your due diligence and crunch those numbers, if you smile, BINGO!

Thanks Ron - Posted by matt(UT)

Posted by matt(UT) on July 02, 2002 at 17:43:24:

Ron, Thanks a lot for the advice. I have enjoyed reading your posts and appreciate the response to my questions. If you don’t mind Ron, I would like to ask you another question: I want to get started soon, but it seems you have a valid point-that Reos may not be the thing to jump into. Is there some niche that does well in this type of market that a beginner could jump into??
I have thought of buying a duplex at a disount and renting out half and living in the other half. I live near a university in Utah and it seems that apartments always seem in short supply. Thanks for any and all advice, Matt