Real Estate Investing Lessons: What to look for when negotiating a purchase on a repossessed home.

pexels-photo-186077.jpeg

Hello and welcome to my first post in a new series focused on my adventures in debt-free real estate investing. There are many ways to invest in this category and I plan on digging deep into this world and seeing how I can profit.

To start, why is real estate such a romanticized topic in the investing realm? Well, there are many reasons, but here’s why I am in love with this world;

  • Tangibility – Meaning, one can physically see their investment. Unlike a stock whereas you hope and pray everything is going well and all the parties are acting in your best interest. With real estate, you can see how your investment is doing or sell on demand a lot easier than most other traditional investment vehicles should there be a need.
  • Inflation protection – As inflation eats away our savings, if you are a landlord, the increased rent you charge will ensure you don’t outlive your wealth.
  • Gain wealth with passive income – As soon as you can eliminate yourself as a bottleneck, your capital can run wild in the background allowing you to build wealth without lifting a finger.
  • philanthropy – vacant and or distressed buildings are not good for a community on many factors and can reduce economic growth opportunities. This in turn, can perpetuate a cycle of poverty.  However, If you revitalize a building or neighborhood by rehabbing disheveled structures, you not only create employment opportunities for the construction workers. But breathe new life in an otherwise, forgotten part of town. And this act alone leads me to my current situation.

Recently, I found a steal in my local market and picked it up. Shall I elaborate? My steal was a home that recently had an FHA loan and was repossessed. I was able to buy the home for 30% less than what was selling in the area. Which means I now have one of the lowest priced homes in this neighborhood.

 

Please allow me to break down a few things. 

  • The benefit of having the lowest priced home in the neighborhood, my property’s value is likely to increase based on the higher priced homes around me.
  • Because the last lender of the property was an FHA loan is a benefit because they have really strict guidelines prior to handing out money. Specifically, FHA verifies the condition of the properties they give loans on. That benefits me because my newly purchased repossessed property has only been vacant for nine months, since this was recently an FHA mortgaged property what’s the worse that could happen?

 

Not all is sunshine and butterflies

Well, as the video references below, vacant homes are subject to condensation. That is water my friends. In time, this condensation will turn into mold.  I didn’t inspect for mold prior to buying the home because I figured the FHA loan guidelines were good enough for me. But nine months of a home sitting vacant will accumulate mold. Be warned. This isn’t the worse thing in the world, but could have saved me thousands of dollars when negotiating a lower price. Learn from my mistakes! And that my friend concludes this story for the day. Please comment if there are any questions or tips you can share.

I hope this post has helped you.

4 thoughts on “Real Estate Investing Lessons: What to look for when negotiating a purchase on a repossessed home.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s