Thursday, March 30, 2006

HUD Properties

HUD properties can be excellent purchases. But you need to know a few guidelines.

First, most HUD homes come on the market available at first primarily to owner/occupant bidders. Very recently I helped a first time home-buyer purchase a HUD home for $63,000. We figure it will need some improvements/repairs (as most HUD homes will) in the neighborhood of $9,000-$10,000. We figure the ARV (after repair value) to be somewhere in the neighborhood of $85,000-$87,500.

So basically, this first time home buyer will put 3% down on an FHA loan and have approximately 16% equity! How great is that?

Investors, too, can purchase HUD homes but must be second in line to owner/occupants during the first round of bidding. After that, HUD is generally only interested in highest net bidder. But, as you can imagine, the "cherry" properties will be gone to the owner/occupants during the first round. What is generally left to investors are the homes with major structural problems, mold infestations, or worse. So you have to be careful.

Also, you purchase HUD properties "As Is". Inspections are okay. However, you should look over the properties pretty well before you bid.

If you have any more questions about this field of real estate, just give me a call.

Wednesday, March 22, 2006

Please, Be Realistic

Not a day goes by that I do not receive a call from a would be real estate investor who would like to begin buying, fixing and selling houses. And I want to say, again, that I am not against this kind of real estate investing and in fact know it to be a very profitable activity.

But you have to make the numbers work in your favor and your numbers have to have the ability to be accomplished. For instance, there are those that will not want to touch a property unless and until they can get a 20%-25% profit from the project. And if you can find those projects, snap them up! But in today's market with many, many people all looking for the same deals you will find more and more investor/speculators attempting to turn properties for as little as 5%-8%. (And those are dangerous numbers!)

Somewhere in the middle is where you will probably have to be. Unless you refine and get really serious about how you find out about properties. Again, I have friends and acquaintances who have their own networks and advertising and can find those 15%-25% properties. But they work hard to find them, to keep their contractors happy and to keep a steady source of leads and buyers to move the properties quickly.

Should you do 5 houses a year at $20,000 profit per house you will make a $100,000. That's pretty good money. It' s going to take more than just a call to your REALTOR, some paint and a quick sale to make that happen.

Just my thoughts. Not trying to discourage. Far from it. I want you to know and plan for a way to make it happen!

Sunday, March 12, 2006

Negotiating

A couple of things to keep in mind when negotiating for real estate;

1. Unless it's win/win the deal will probably not happen. Both sides have to get enough out of the transaction to make it work. Not everything they want. Just enough to make it work. (I have seen deals so one sided that one party really thought they got by with one. However, those deals seldom actually closed because the other party came to their senses and figured out a way to get out of the deal.)

2. Time is your biggest friend. Time allows the other party to get used to the thought of owning/selling that property. Once they are invested, it is easier to ask for "just a little bit more".

Wednesday, March 08, 2006

Current Selling Conditions

This information is from the Heartland MLS which serves as a very important tool for real estate agents and their buyer/seller here in the Greater Kansas City area.

January 2006 Statistics

Total Homes for Sale 21,284
Total Multi-Dwelling Homes for sale 692
Average List Price for Homes $195,723
Average List Price for Multi $198,934

Sales of homes 2,178
Sales of multis 69
Average sales price for homes $184,893
Average sales price of multis $229,839

Average Days on Market for homes 54
Average Days on Market for multis 44

Study these numbers. They will tell you a whole lot. I can see many things in these numbers, including a very important trend.

If you would like numbers from just your part of town, drop me an email or give me a call. I would be happy to send you your neighborhood's specific statistics.

Monday, March 06, 2006

What Kind of REALTOR will you choose?

From Robert Irwin's Tips & Traps When Negotiating Real Estate - Second Edition:

I want an agent who represents me to be hard-nosed, irritating and determined; to have learned his or her business in the backrooms; and to tell it like it is and get what he or she goes after. I want the other guy to have the "nice" agent.

Which am I? Feel free to call me for a list of references. Or, you can ask my wife. I must possess both qualities. Because she says she loves me know matter how irritating I can be!