Hi all. My Q: How to read foreclosures.com-type listings, ie which values are important for R.E. investors?thx
DETAILS: Basically, I’ve really taken to real estate investing and have read about 8 books now (7 more to go! ouch), so have some good "book knowledge" but zero experience. My question is this: When you’re reading, eg, a foreclosures.com-type of website data on a PRE-foreclosure, which numbers should the investor (aka "credit saver") be evaluating in order to make an intelligent OFFER to the buyer? I know the basics like I’ll have to pay the back payments, back taxes, etc (PLUS any stated or hidden liens etc), but do I use these to present a deal:
Improvement value / Land value / Taxable value (Ar these 3 important in my offer or instead use:
Last sale price…(I know this one)
zestimate (I know this one)
Transfer value (what is this?)
Default value…(I know this one)
In other words, I want to make an intelligent offer on the preforeclosure. Please, someone with experience, what’s the math? And are there any missing numbers?? (eg loan balance, equity). Sincere thanks.
small typo sorry: <<above "Improvement value", please add the word "how" so reads "but HOW do I use these to present a deal?:">>
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One comment
Elle on July 17, 2009 at 8:50 pm
Dear Rog V,
I can relate to your confusion as I love reading and own a lot of Investment books and even taught a seminar…etc..-Numbers!:) Formulars! Great reference- but not always the only way to determine your offer…First of all: you can buy and investment property for different return purposes you need to establish are important to you - Cash Flow or Equity Build-up (appreciation) or Both (If you are lucky..:) )It is complicated to evaluate a property based on a "print out" Any advice would depend on your Goals: WHY are you buying this property? What is a cost of repairs? What is the debt service (your mortgage payment if any on this purchase)? What will happen with taxes? If you can lease this property how much would rent be and what is a NET INCOME after your expenses and debt service is paid? As to Values…Sometimes the values are inflated on and estimates are too broad…I truly believe the best way is to "hire" an agent with experience to help you EVALUATE EVERY PROPERTY you are considering in depth and details, or to talk to one or to work with one ..etc. Someone reputable in your local real estate market- call them up, ask to meet and if they will work with you on this deal-great, if you want to do this one yourself-still ask advice, but establish a relationship for future sales or buys…It is too risky to go in based on numbers on the sheet you have no confidence or EXPERTISE to interpret in depth - Agents /Brokers with investment edge experience (ask if they have invested themselves and how and how well they did, beforehand:) !) can help you with a reality of the actual neighborhood, recent sales of SIMILAR PROPERTIES (by size, condition, etc) also will be able to help you with how fast the value appreciate there if any and at what rate…Or better yet…-Take a real estate class and become an agent yourself….I believe the best way to be investor in any industry is to know that field well - and interact with it - as real estate agents do on the day by day basis, getting in depth understanding of the marketplace and its unique demands- they make good investors usually…:) I am one of them.
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