Buying Reo Houses
Buying Reo Houses
Housing Investment REO. Worthy Investment?
Recently I've seen a lot of noise on people who buy real estate banked (ROE) for a very low price and flipping them for a good profit. Most of them are blind and probably in high crime areas. Am seeking input from anyone who has tried this method of wealth creation and the results he has.
I've been looking for property investment properties bank-and the prices are generally lower than 25% of the non-distressed properties (match pattern in similar areas.) But those are not sold as REOs. A OER thing about is that the seller (the bank) should not make any disclosure. It is then up to the buyer to have inspections done and to verify all the information ready before close of escrow. So who knows what kind of problems that may have been either just patched or expect to happen again? Now, possibly can make money are the dispossessed / places of the paper, where the disgruntled former owner took everything I could get their hands on. I saw a property that was all kitchen and bathroom cabinets, all fixtures, and even all the interior doors. It sold for $ 150K in a neighborhood where the model party goes for $ 180K-$ 200K (including foreclosures and other). But it would take about $ 20 – $ 30K to make it habitable (and resealable), unless the Buyer did most of the work itself. Even then, the market continues to fall and would be lucky to break even. But, if you have cash and can put at least below 25% (needed for non-owner occupied mortgages), you can get an interest-only loan at about 7%, which comes out to about $ 1,200 a month on a loan of $ 130K (including HOA fees, taxes and insurance). So, you can rent it for a while and become a slumlord … err … owner for a few years. Then, when the market turns around and increases in the property at $ 100K for several years (around the time that his interest-only loan is payable in full) to sell, receive your payment back, and turn a profit. Or, keep your rental income increased by an average of 5% per year. I'd say it's worth the investment.
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