Suggestions before purchasing a Bank Own Property(REO)

With home prices trending downward and steep decrease in home prices I am certain many are at least considering purchasing a bank owned property (REO).  If you are new to purchasing REO properties there are important things to think about before you make a decision.  One important rule of negotiation is obtaining information to make a wise decision.  Assuming you are new in purchasing, allow me to offer some suggestions to make a wiser investment or purchase decision.

First, find out your financial abilities by seeking a qualified, competent loan officer to help you get your financial matter in order.  In a buyer's market, those pre-approved command an advantage.  The ability of a buyer to prove purchasing clout and a fast escrow closing helps favors an accepted offer.

Second, a qualified real estate consultant or season investor can help expedite the learner curve.  A real estate consultant can help you find the best location, price and terms.  An agent has the ability to search MLS property, as well as producing an inventory of homes on a regular basis for your investigation.  Take time to inform yourself, read books and research the Internet to educate your self on the purchasing property for investment purposes. 

Third, decide which area is best for you, as location drives the best rent and resell value.  If you do not know the best areas, ask a realtor or someone your know who understands the area.  Just because a home is an REO property, location still matters.

Fourth, unless you have the time and money, try to find a home that is close or ready for move-in.  Time is money and if you need a lot of time to remodel a home, it might not be worth your investment.  REO's come in various conditions from major overhaul to move-in ready.  Although you might get a discount in buying a fixer upper, the amount of money it takes to fix up and time off the market might not be a financially wise decision.    Since selection is favorable currently, choice the best home that you can afford.

Fifth, if you decide to purchase a home for investment purposes contact your financial adviser and make sure the numbers work for you.  Find out what the local rent is going for your type of home and the area.  Ideally you want a positive cash flow with the cost of rents to cover your expense for the loan, property taxes and insurance.  Plan on setting aside at least 1 months rents for unoccupied periods. 

If a landlord hat does not fit you, consider hiring a property manager for a small percentage of the rent to find, screen, collect, and deal with tenants billing, problems, and maintenance.  Owning an investment property is a great opportunity to take advantage of your property taxes, insurance, and mortgage paid by the tenant.   Equity is sure to increase again in the near future. 

In Santa Maria Valley, there is a plethora of REO properties in various price ranges and locations.  REO properties priced well are selling quickly and sometime receiving multiple offers.  Establish your financial budget, home type and location criteria, and real estate advisor to help with property information and negotiations.  The ability to find an ideal property quickly and make an offer makes a big difference in purchasing REO properties.  Need help call in purchasing a foreclosure property?  

Call or email me at 805.264.1646 or cesarbautista@kw.com.  For a list of REO properties, email and send your name, home type, price range, location and we will responds in 24 hours with an email listing sent to your email.