Real estate investors often rely on a handful of tried-and-true methods to locate residential properties that they can rehab and resell for quick profit. They may, for example, blanket every address in a particular zip code with “yellow legal” letters. Alternately, they might plaster street corners with hand-written “We Buy Houses” bandit signs, or buy ads for display on bus stop benches and in local newspapers. These methods can be effective, but they frequently produce low returns in exchange for their upfront costs. Savvy real estate investors have discovered other, more profitable property-locating strategies.
Estate Sales
Recently-filed estate cases can be a boon for both real estate investors and an estate’s heirs. A house in an estate might have been owned by the decedent for thirty or more years. His or her heirs will get ownership of the house, only to find that they are then responsible for real estate taxes, upkeep, and regular utility payments. Many houses that have been owned by the same person for many years have not been updated, and as such they are not as attractive to buyers in a retail market as other properties that have been modernized.
Investors can often research estate cases in online records maintained by various county court systems. Not every estate will include real property, and the investor will generally need to do additional research in real estate tax rolls to determine whether a decedent is the owner-of-record of a specific piece of property. Still, the time required to complete this research is often less than the time and resources that are needed to send out blanket mailings.
Divorce and Other Legal Proceedings
Possession and ownership of the house is typically the second most contentious issues in divorce cases, after child custody. In some divorce cases, the spouses will choose to sell the house and to split the proceeds. County family court systems maintain searchable records of new divorce cases. A creative real estate investor can establish himself or herself as a ready source of immediate cash that the spouses can divide without having to stage or list the house with a realtor.
Homeowners who become embroiled in other civil or criminal legal matters will often need to sell property quickly to fund the litigation. The real estate investors who buy properties in these situations are not vultures that prey on weaknesses, but instead are providing valuable services as a source of ready capital for people who do not or cannot sell their property through traditional channels.
Exhausted Landlords
Many people get into real estate investing as landlords, with no real appreciation of the challenges of that position. Local property managers can be a good resource to find properties that are owned by landlords who are looking to get out of the business. Similarly, rentals that are advertised directly by owners on websites like Craigslist are strong investor leads. A quick call to those landlords can determine whether they are willing to let the property go for a price that can give an investor a healthy fix & flip profit.
In every case, the investor who is intelligent enough to find these deals will need to move quickly to get them under contract and to close the sale. Investors who do not have their own funds often look to asset-based lenders who can provide short-term loans, typically at interest rates that are only marginally higher than traditional mortgage financing.
If you have found a property that you need to finance in the southern or western United States and you are looking for financing, please contact us for information about our asset-based finance services. We are Center Street Lending. We have funded hundreds of fix & flip transactions and can help you get the financing you need to make your real estate investment business profitable.
Center Street communications are not intended to provide business, legal, tax, investment or insurance advice. No Center Street communication should be construed as a recommendation for any business or investment strategy by Center Street or any third party. You are solely responsible for determining whether any investment, investment strategy, business strategy or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your legal or tax professional regarding your specific situation.