| I'm a real estate investor and I buy foreclosures (mostly REO's) - to me this is where the money is. Of course, other investors have their ideas, but this is what works for me. Keep in mind, I know all about Cincinnati but nothing about Indiana. I'd advise you to speak with realtor, home owners & other investors to help you "buy smart" (that's the key in investing). Check to see if there is REA or REIA (real estate investors association) in your area.
I've bought some properties at sheriff sales, but mostly that avenue is a lot of work with little results, so I buy them after they've been to the sheriff sales & bought back by the banks that own them. But, if you decide you want to try sheriff sales, let me know I will provide more info.
First, I would contact a real estate agent and tell them you are interested in "lender owned" or "bank owned" properties or "foreclosures" or "real estate owned" in the area/s that you would be interested in. I have realtors send me automatic e-mails with links to the properties they find for me. If you don't have a realtor you currently work with, you might even look for the one who handles the HUD foreclosures in your area, now, and start working with him/her.
Using the MLS (multiple listing service) in your area is also handy. On most MLS links, you can choose "residential" or "multi-family", areas of interest and $ amount. I use MLS not necessarily to find houses (no way for me to search just "foreclosures"), but to look at other houses on the street of a house I'm interested in. See what they look like & see what their asking price is.
For Government owned (foreclosed) homes for sale (many links, including HUD, Veterans, IRS, etc.): [url]http://www.hud.gov/homes/homesforsale.cfm[/url]
Specifically HUD houses (foreclosures) for all states:
[url]http://www.hud.gov/homes/index.cfm[/url] (scroll down, then click on "Indiana" "Go to the requested page")
Indiana HUD link: [url]http://hud2.towerauction.net/IN.htm[/url] and click on Available Properties for Sale at; [url]http://hud2.towerauction.net/e17/gen_list/IN.htm[/url]
Once you submit a bid & want to follow it, or to see if your bid was accepted or what other offers were received: [url]http://hud2.towerauction.net/e17/results/IN.htm[/url]. FYI, for a HUD property, a realtor must submit the bid for you, so that's why I suggest using the HUD listing agent in your area. Tell him you are an investor. He will more than likely work with you on commission, in hopes of you buying another one in the future. My HUD agent shaves some off his commission (double commission - as listing agent and selling agent) because he knows I will buy from him in the future.
Hudson Marshall is like a clearing house for foreclosed properties (lender owned) that have not sold after a few months. Call 1-800-441-9401 ask to be put on their mailing list. They send out a nice, full color brochure about a month before the auction. Here's their calendar: [url]http://www.hudsonandmarshall.com/calendar.asp[/url].
Now a friend of mine swears by the OCWEN web site, but I have never used it and I'm not even sure what types of foreclosures they are: [url]http://www.ocwen.com/reo/residential/reoproplist.cfm?statechosen=IN[/url] - several cities are listed! Actually, this looks quite fun, I might have to do a little research today!
One additional note, as I'm thinking about it - most "lender owned" properties require a "pre-approval" letter for financing given to them when you submit an offer (they want to make sure they are not wasting their time on someone who can't get a loan). You can get this pre approval letter through who ever you want to finance your loans. I use my equity line on our primary residence for putting money down when I have to. If you need more info on loans, or would like some contacts, please ask, I'm happy to help! I have a mortgage guy here in Ohio that can help in your area as well.
So these are kind of rule of thumb that I use:
* For flipping a house, get an adjustable interest rate, fixed rate for houses you want to keep for rentals.
* Getting an "equity line" on a house is a better deal than getting a "mortgage", if you can afford to buy the house outright. I use our equity line on our house when possible, then fix up the house and get a new equity line on the rental property. It snowballs into more houses, each supporting the payments to their equity line from their rent.
* For a house worth $100,000, I would pay max of $80,000 if it needed only a little work, $70,000 if it needed some work and a lot less if it needed a lot of work. (The lowest I paid for a house was $34,200 and put about $55k into it (nearly everything was redone in the house). I sold it after renting it for nearly a year, for $50k profit, plus each month I had about $500 profit from the rent.) Your % of profit should be much higher the more work & $ you've had to put into it. Make sure than neighborhood could support the sale. (There are some houses you would never put granite counter tops & marble floors in, right?)
* Rent for a house should be at least couple hundred more than your payments (PITI). The rule of thumb is different for apartment buildings. About 1/2 of rents should make your payments. There is a lot more profit, but a lot more work & a lot more headaches in apartment buildings.
* To attract great tenants, only buy in areas where they would want to live. (i.e. bad areas attract bad tenants - but there is a need for section 8 housing if you want to get into that).
* If I want to flip a house, I try to reduce capital gains by keeping it at least a year or doing a "like kind exchange" when purchasing another property. Often times, I will "lease with option" a house for 12 to 24 months for one I want to flip. I can usually sell the house for more money that way than if I just sold it out right. There are so many people with bad credit who need lease with options, there is always a need. If you get into selling property with lease options let me know, I can provide more detailed info.
Interest rate are still low, now is a good time to buy! The down side, the renters out there often have bad credit. But . . . there will always be a need for rental houses, and lease with options especially with all the foreclosures going on!
Anyway, I love real estate investing & foreclosures. It can be very lucrative. I currently own 23 properties. My tenants are making the payments for me (and and providing a cash flow of over $6000 per month) and in 20-25 years all own them all outright, without costing me anything out of my pocket.
Last edited by LindaP777; 01-31-2008 at 12:22 PM.
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