Real estate is one of the most profitable industries in the United States, if not the world. Net profit margins are second only to accounting, and wise investments often outlast decades of stock market volatility. Buying the right investment properties, however, requires knowledge of your particular market and an ability to act quickly. Actionable information is everywhere, but only you can determine which resources best serve your focus. Here are some worth pursuing.
County Courthouse Records
Investors often search out properties in financial distress, and those records can be found within your county clerk’s records as part of the foreclosure process. While time periods and terms differ by state, a general flow of stages offers various options.
Once the appropriate county clerk records a lis pendens as part of the public record, a property becomes a pre-foreclosure until it’s auctioned. Owners can avoid a foreclosure auction through a:
– Short sale; all lenders with interest in the property must approve the deal.
– Deed in lieu of foreclosure, which transfers the deed to the lender.
– Deed or mortgage to lease; the owner become the lender’s tenant.
– Regular sale.
Meanwhile, the county will issue a notice of foreclosure, announcing the date and time for the property’s auction. During this time, investors can contact owners to make an offer up until the actual date and time of the auction.
Foreclosures and Auctions
For the actual foreclosure, the property is auctioned. While many auctions are held at the associated county courthouse, they can also be held at the property, at another designated location or through online sites. Some courthouses hold regular auctions, or sheriff’s sales, on standing schedules, such as the second Tuesday of each month at 10:00 a.m. Most auctions are cash only, so investors must come prepared to deposit earnest money, with the balance prepared for disbursement. Terms are usually listed on the auction announcement.
When foreclosed properties receive no bids, they return to the mortgage lender to await a buyer as REOs, or real estate owned by the lender. Investors can purchase the property from the lender with the benefits of clear title insurance and a home inspection or appraisal.
Court records also include information on deaths as well as divorces, separations and annulments. In addition, records of works for planning, development, taxation, incentives and zoning issues are all also matters of public record that affect real estate values, land use and accessibility. Don’t forget, either, that public records are usually posted in the local newspaper both in print and on the paper’s website.
According to the National Association of Realtors, “The top places where Realtors place their listings are realtor.com, Zillow and Trulia.” A number of databases in addition to those are also available, their inventories varying with the preferences of each area’s licensed professionals. All offer search options that can be filtered to fit your specific geographic focus and property requirements:
– Realtor.com is the public, consumer version of the MLS – Multiple Listing Service – endorsed by the National Association of Realtors. The site contains Realtor listings for new construction, homes for sale and foreclosures as well as local market and area data.
– Zillow, which also owns Trulia, is renowned for its accompanying Zestimate feature, providing value estimates. In addition to regular property listings, it also has search options for foreclosures, properties for sale by owner and properties “coming soon.” The “make me move” option allows potential sellers to unofficially list properties.
– Trulia has similar listings to those on Zillow, with a professional section accessible through additional subscription.
– RealtyTrac specializes in properties in financial distress: those in default, pre-foreclosures, foreclosures and REOs. It’s a subscription-based site that allows a 7-day trial period.
– Loopnet focuses on commercial real estate for sale or lease. It handles listings for every preference, from industrial to multifamily, office, hotel, healthcare or agricultural.
– For online foreclosure auctions, listings may include references to online auction websites like Williams and Williams, Hudson and Marshall or hubzu. These sites also list short sales, foreclosures and traditional sales.
– Major banks maintain websites for their foreclosures and REOs: Wells Fargo, Chase and Bank of America are just three. Check the websites of banks in your area for listings.
– FIZBER, FSBO.com, ForSaleByOwner.com and Owners.com are all examples of online websites that let owners list properties, and some include foreclosures and document support as well.
– Craigslist has a real estate for sale option, with properties for sale by owner, contractor new construction listings, and even foreclosures and bank REOs.
– City-Data.com is a useful site for commercial investors, as entries for “major industries and commercial activity” include information on state-based business incentives and development initiatives.
Licensed Real Estate Professionals
No matter what investment options you pursue, maintaining working relationships with knowledgeable, experienced Realtors is key to successful investing. Certain agents or brokers specialize in investment properties or foreclosures and can save you thousands of dollars in mistakes and missed opportunities.
Licensed agents have access to the full, proprietary MLS databases, which include information beyond what’s posted on public realty websites. They also have the contacts and means to investigate the full details of a property’s circumstances. For example:
– An agent may be in the process of preparing, or staging, a property for official listing but hasn’t yet entered it into the database.
– Some valuable properties may never be publicly listed but instead change hands through one quiet exclusive, off-market or pocket listing transaction.
– Properties may be temporarily taken off market to “freshen” the listing after long market periods, perhaps lowering seller expectations.
– Agents may be aware of property owners anxious to avoid a loan default yet reluctant to list publicly.
Maintaining solid professional relationships ensures that you’re the one Realtors are thinking of when they tell potential sellers – or other listing agents or brokers – “I know an investor who likes these kinds of opportunities.”
Vital information can spring from any corner. That heads-up on a choice apartment building could easily come from a casual conversation with a plumbing supplier, a pet sitter or a tenant in search of a new place to call home. A distant company’s expansion could alert you to an influx of buyers or tenants anticipated over the next 2 years. Find your best data sources, and nurture your real estate intelligence network. Once you know where to look, you, too, will find your future’s investments.