Real Estate Investment Property and As Is Where Is Sales

For those who have access to funding, the time is ripe for investing in real estate, and potentially making big profits. With foreclosures on the rise, and so many REO properties, getting a good deal can be relatively easy. Even with it being a buyers market, there are a few things you need to consider when purchasing real estate in hopes of a big return.

The majority of REO homes are being sold “As is Where is.” This type of sale is exactly as it states, has no warranty, and any repairs are at the expense of the buyer.

It is a buyers’ market; however, common sense needs to prevail. It makes sense, that if the homeowner could not afford their house payments, then chances are, they could not afford the maintenance of the home. Many of these homes will not have the equity to do repairs needed to make the home sell, while still allowing for a profit margin that will make it worth your while, let alone leave some money on the table to offer built-in equity to a potential buyer. Many of these homes are those you would purchase as long-term investments. You will be making the needed repairs on your dollar, in hopes of gaining equity later on. Once the repairs are made, you can rent the home to keep your payments made, while waiting for the property values to rise.

Although As is Where is properties can be a good deal, it is a good idea to research the property thoroughly, making sure you get inspections done in order to know what you are getting yourself into. Although banks will not put money into a property for general repairs or cosmetic repairs, they may negotiate a little on the price if you can show that the repairs are excessive for the price they are asking, such as having to replace a roof. Remember to get estimates of the needed repairs, and keep copies for your records.

Real estate investment property can be very profitable if you approach it with a keen eye for business. Remember your goal is to make money. If you are planning to purchase a home in hopes of an instant income, depending on the amount of repairs needed for the home to sell, you need to get the property for no more than 60% of the estimated value of the home. If you are planning on wholesaling the home “As is Where Is” to someone else to fix up and repair, remember to leave some equity on the table for the next guy to make your deal more attractive.

By: Lou Steverson

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