I have written articles related to investors purchasing distressed properties for the purpose of generating a profit in today's market. The concept sounds good and the income possibilities are positive; providing the approach to this type of investment is sound.
If you are an investor with an interest in purchasing distressed properties it would be wise for you to follow a solid business plan to insure the best return on your investment. I would suggest the following procedure in making a decision to purchase:
- (1) Involve a Realtor who can identify properties in the market areas you have an interest.
(2) Have the Realtor review these properties with a home inspector to evaluate them based on the cost of needed repairs.
(3) Determine your bottom line and compare that to the cost of rehabbing the home as well as the highest purchase price you are willing to pay for a given property.
(4) Have your Realtor do a market analysis to determine what homes in livable condition would sell for in the market specific to your investment property.
(5) Use your Realtor to submit your offer and assist you in negotiating the price you are willing to pay.
(6) Once you have closed on a property invest the necessary money to make needed repairs and get the home ready for resale.
(7) Use your Realtor to market your homes for you (note: you should have figured in commissions and closing costs into your basis beforehand).
Avoid attempts to set commissions at levels lower than the industry standard. When buyer agents see what they view as "unfair" buyer agent commission rates they may very well pass on your home and not bring it to their client's attention.