Getting Started - My First Deal?
Hi there.
I've found a property - which I am going to drive by tomorrow - that has been foreclosed upon and has been listed for 10 days.
The list price is $75 and has assessed at $105. The comps show similar properties range from $105 to $125.
It seems that if I like the area, I should do the following (but in what order and am I missing anything?):
1. Find a general contractor to assess the interior and exterior so I know what I am dealing with repair-wise.
2. I have a small amount to invest in "hard cash" but not as much as $75 plus repairs. I guess I need to find a lending institution to help - should I contact them before or after #1 above?
3. It is in REO - so when/should I pay for a title search?
4. Contact the bank and make an offer - how urgent should I be about this? Shouldn't I do #1 and #2 before contacting the lender?
I guess if 1-3 of the above look "good" I might have a deal here that I can make a few dollars. Given this is my first time, I am NOT looking to make a killing, just get the experience needed for my next deal.
What are all your expert thoughts? 
Thanks ahead of time-
Dave
Welcome to TCI Dave,
Sounds like your first step should be to seek some more knowledge on this subject, a good book or course.
Your first issue would be having the funds to purchase and or an investor to back you up.
You may want to consider locating real estate for other investors for a finders fee - kind of on the job training.
Let's see you have an REO that no body wanted when foreclosed on and now it's on the market for 75k and you say comps value the property at 105-125k, my first question would be what will you do to make it worth 105-125k.
You should do a title search yourself and than upon acceptance of offer if the lender allows a contract subject to clear title this will occur before closing
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Thanks for the reply.
I am assuming that the property has some need for repairs.
Thus, given my limitation in estimating these costs, I assumed I'll need to employ the services of a good professional contractor for an estimate.
Otherwise, I am guessing there is either a problem with the title AND/OR the comps I got (from www.bankofamerica.com). Does it make sense to *always* plan to pay for a professional comp service and title search at this stage of my research?
I'm in the process now of reading up on this via info on the web and what I've found at Barnes and Noble.
It sorta sounds like you are saying if the property made it to REO, it is highly unlikely I could make money. Am I reading too much into your reply?
For my first effort, I figured the REO route would be better than an auction (which seems too risky for me right now given the chance the properties may be sight-unseen). I realize the profits are much lower when going the REO route.
-Dave
P.S. I just retired from Blockbuster and I have a good size chunk of money to work with (not $90k though - which is what I am purely guessing repairs/upgrades might bring the total cost to). Thus, I am planning on contacting a lender from TCI's list on Monday.
If you have no ideal on repair cost than you should contact a contractor for estimates, you should learn how to do this, as it will get you in the ballpark of repair cost. You need to develop yourself as an investor in such a way that you can review a potential investments repair cost, holding cost, marketing cost and profit potential in 30 minutes or less. This will come with research, studies and of course time.
When it comes to comp you really should get them from a local realtor or broker in as close likeness and distance to your subject investment. What may be of help to you is taking a local appraising class in your community.
When I evaluate a property this is done by my self, this is something that is not cost effective to pay for, as you will be looking at more properties than you purchase. I have never paid for comps. I do have a professional title search and title insurance done on all properties that I outright purchase but normally do not on creative transactions.
No I am not saying that with an REO property you can not make profit on, as we have no details to determine this fact as of yet.
REO's are the easiest route to go if you have cash, but for creative transactions, individual property owners are best.
You may want to consider a partnership with someone else in this project. Also, do not use your retirement funds just yet until you get some more knowledge in this area. Join a local REI club, read a lot of book, take a training class or two and try to find a mentor that will be your guide in this process.
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