Wholesale Flipping Bank Owned REO Houses Is An Overlooked Goldmine
Savvy real estate investors are making a fortune flipping bank reo owned (REO) property while other investors are stumbling over each other trying to do a short sale.
If you really want to make money with real estate investing in the shortest amount of time, you want to completely avoid pre-foreclosures and short sales. The reason is time. When you are trying to purchase those houses, time is not your friend. You will possibly spend months trying to work a short sale deal before you even know whether or not you are going to get it. You can probably imagine just how much money you are losing out on when you are sitting around, simply waiting to be told whether or not the properties will become yours.
Another reason why short sales and pre-foreclosures are not the ultimate strategy for fast cash is that the banks still have time, they still have ground to negotiate. This means that they are going to try to make sure that they are getting every penny out of you for the purchase of the property. After all, the house could still go to auction and they might find people in a bidding war over it.
Generally, the bank ends up stuck with the ownership of the property. This is when the bank panics. This is when the bank starts to really lose a lot of money fast. And this just so happens to be the time where it is in your best interest to work a deal. The Lenders REO department is where the houses end up after the foreclosure auction are managed. The lender then is stuck with all cost associated with that property. They still have to pay for home owners insurance and taxes. They have to pay for winterization and grass cutting during the different seasons of the year. They are also very much aware that they are at risk with the property. Lenders are in the business of collecting money, not holding onto real estate. Because of this, many great deals can be made.
You can obtain many properties at wholesales prices, just because the mortgage company is so anxious to get rid of them. They will sell them for prices that might just make your jaw drop. These are prices that would have never been considered on a short sale or pre-foreclosure property. But now, just a few months later, after the mortgage company sees that they are stuck with the house, they will do anything it takes to unload the property. It's like they are almost giving them away. Since you are able to get such an incredible deal for the houses, you are able to flip them extremely quick.
Many of the homes need just a fresh coat of paint and a few odds and ends fixed. Some do not need any work at all. Let's say you purchase an REO house for $30,000 but it is worth $80,000. You could sale it for the full market value or you can list it for $65,000. Why would you do this? Well, because buyers will jump all over that. And since you really did not do much in the way of work, you can afford to take that small cut. Still, you end up with $35,000 profit before Realtor fees and taxes. Not a bad chunk of change. When you lower the price a little, you almost ensure that you are going to be able to flip it quick. The quicker you flip it, the more money you make. Just think, you could make yourself a millionaire in a few short years by simply concentrating on bank owned REO houses and flipping them fast for a quick profit.
Once you really start seeing how all this works, you will find yourself laughing at the real estate guru whose marketing claiming that short sales are the way to go. You now know better but it is up to your actions to make sure that you are doing something positive with the knowledge you have been given.
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Contact the AuthorDuncan Wierman
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