To start investing your hard-earned dollars in the real estate world, start looking close to your home. Try to find houses, land, condos, duplexes, town homes, etc. that are priced low. Oftentimes you can find good deals with foreclosed houses or REO’s (bank-owned homes). Also, watch for short sales where a property has already started the foreclosure process yet the property owner would rather sell his or her home rather than see it foreclose to avoid attorney fees and hopefully recapture some of their investment.
There are also pre-foreclosure sale, pre-sale and compromise sale homes. These are homes where the lender is agreeing to sell the property for less than the amount owed in exchange for releasing the mortgage as a lien on the property.
Once you have purchased your property you need to start with simply cleaning up the property; from the simplest things like pressure-washing the patio and exterior of the home to cleaning up trash, cutting down weeds, mowing the yard, trimming any trees or bushes and removing stains from the driveway. A deep-cleaning of the interior is also necessary.
When cleanup is complete, go back to the bank where you have your loan and refinance for the new value of the home. If your lender only allows you to refinance after having lived in the house for a certain amount of time (usually called seasoning) then it is advisable to find a bank that doesn’t have such restrictions.
After you refinance, you can use some of the extra money from that for repairs, upgrades and other home improvements. Remember that the one thing a buyer or renter will look for is curb appeal — or, how the home looks from the street — sometimes simply adding some well-placed flowers or trees is enough to boost the curb appeal.
Many people prefer to rent these homes in order to keep a positive cash flow as they wait for the real estate market to recover, this a great way to make the mortgage payments, or you can choose to live in the home and sell it later.