Learn how to find fixer upper homes that won’t cost you a lot of money. Do you want to turn the worst house on the street into the best house? Or do you just want to find the best bargain real estate?
It seems that we learn from our family and friends the traditional way to make money in real estate.
That way is find a good fixer upper to rehab, clean it up, maybe paint and repair inside and out, landscape it, and put a white fence around the lot. This process dates back decades in many families.
Want to learn more about bargain real estate? Would you like to buy homes for pennies on the dollar, and without a mortgage? Or earn outrageous interest rates secured by real estate? Then you don’t want to miss this FREE class.
STEP ONE: DETERMINE YOUR STRATEGY
The tough question is what makes a good fixer upper home. Could it be the price? Maybe it’s the location? Or could it be your criteria to sell it quickly?
There are probably a handful of questions I haven’t stated. Maybe it’s how much work is required to repair and replace.
Today I’ll answer your question about how to find fixer upper homes, and I’ll try to give you as many places to search as possible.
My suggestion before you start your search is to determine your strategy. Are you buying to hold? Or do you plan to buy and rent it to others? Maybe you are buying, and you want to quickly sell?
HOW TO FIND FIXER UPPER RENT-TO-OWN HOMES
Rent to own is popular. That means you are a seller, however, you are becoming a banker too because you’ve accepted an installment sale.
Rent to own works, however it requires a lot of management. Land contracts and contracts for deed also work and require less labor and management. These are all money makers.
My point is you’ll have plenty of information about selling, and there is book upon book on how to manage.
Your first decision must be are you buying to hold, rent, or sell quickly? Why are you buying?
Here’s a few pointers in the direction for local good fixer uppers.
HOW TO FIND HOMES AT FORECLOSURE AUCTIONS
Traditionally, each county in the United States will conduct lender or bank foreclosure auctions. These auctions are banks and lenders suing to demand that delinquent property owners return collateral to the bank or lender.
These auctions are conducted by county sheriffs or one of the deputies.
Small population counties will have foreclosure auctions regularly during each week day. It’s not unusual for large population counties to have multiple auctions, one, two or maybe five auctions.
I’m referring to bank or mortgage or trust deed foreclosures for defaulted loans.
USING PROPERTY AS COLLATERAL
The majority of real estate auctions are banks trying to recover collateral. The collateral is usually a home which was the security for the loan. The local bank will have evicted the previous owner and scheduled a foreclosure auction.
Many of these properties are relatively new and can be purchased for reasonable prices. All of these properties can be reviewed and looked at. This is a source of average to good fixer uppers.
From time to time, state governments will create loans. These loans are also foreclosed upon and another source of good fixer uppers.
KNOW YOUR EXIT STRATEGY
You must know your exit strategy. If you take this into account, you’ll know exactly what you are willing to pay.
All successful investors have an exit strategy.
A good fixer upper may be a property that is not sold at auction for the lowest price, but still a good price because it’s a good property.
What makes the price good? There is margin between the purchase price and the ultimate sales price. If the margin is wide, it allows the buyer room to invest in the average foreclosure bargain.
In this case, the buyer can fix up the property and generate a good profit because the property has been transformed from ugly into a good purchase for the next buyer. In other words, there was plenty of money to rehabilitate kitchens, bathrooms, paint, clean and all the rest.
HOW TO FIND FIXER UPPER HOMES AT HUD
Another source nationwide is the U.S. Department of Housing and Urban Development (HUD) which is a branch of government created by Congress to help newcomers obtain financing.
HUD also finances many with less than pristine FICO scores. The bank relies on FICO credit scores, however HUD is a more lenient lender.
HUD auctions are nationwide and the real estate community, brokers, and realtors will list the properties on the multiple listing system. These properties are not a steal, however many are in good neighborhoods.
The magic that is performed in many instances, transforms the property from a don’t-wanter to a good fixer-upper. Suddenly, a not so hot fixer is ready to sell for a nice profit.
Good fixer uppers are a time-consuming research project. However, the time is well spent when you sell.
HOW TO FIND FIXER UPPER HOMES AT THE USDA
Houses may be available in rural areas from the Department of Agriculture, where you may find property that has been in default and is now being recycled back into the market.
The good fixer upper may be purchased for 20%, 30%, or possibly 40% less than market at these auctions.
HOW TO OBTAIN FINANCING
Financing is always a challenge for new buyers and for buyers that have low FICO credit scores. For example, many recently divorced have difficulty purchasing property due to low FICO scores.
HUD financing is more benevolent and flexible than local banks. Many qualify for these government loans. Most require a down payment, however it’s very low, usually about 3%.
This type of financing makes many prospective properties good fixers because there is a market to quickly sell with financing available in relatively good neighborhoods.
HOW TO FIND FIXER UPPER HOMES AT TAX SALES
30 years ago, I discovered a little-known but highly lucrative market that was available in every county in the United States. As it turned out, all of these counties announce and conduct tax defaulted property auctions.
Some of the tax defaulted properties are junk. Many of the properties are bargains and regularly sold at a public auction for 60%, 70%, or 80% less than the current market value.
When I discovered this government mandated and administered market for single family homes and other real estate, I stopped chasing bargains and concentrated on local government tax defaulted property auctions.
HOW TO FIND HOMES AT DEEP DISCOUNT PRICES
Tax defaulted real estate is sold at very low prices, and therefore, the risk is very low.
Why is the government selling these properties? The local county has repossessed, that is they have foreclosed on, these properties for nonpayment of property tax.
This is astonishing because taxes on property is very low, usually 1% or 2% of the assessed value.
A $200,000 home may have one year of delinquent taxes in the area of $4,000 and $8,000 for 2 years. Imagine buying a property at a tax defaulted auction for that kind of price.
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FIND FIXER UPPER HOMES WITHOUT A MORTGAGE
However, that’s the starting price. You will not be the only bidder in the marketplace. Other bidders are bargain hunters, and the highest bidder wins.
Many of these properties are auctioned mortgage-free for 20 and 25 cents on the dollar. The treasurer, as a part of the auction, has been given the authority to delete, that is wipe out, the mortgage loan.
In the deed of trust states, the deed of trust is also extinguished and deleted from the official property records.
These properties are sold to the highest bidder at a public auction. The starting bids are usually very close to the back property taxes.
TAX-DEFAULTED REAL ESTATE: A BUSINESS OF ABUNDANCE
In the United States, there are over 100 million taxable properties. Property records will reveal 2% to 2½% of these taxable properties will end up in some form of tax default.
Anyone with money is allowed to purchase and bid at the auction. The successful bidder will receive a deed to the property, however the property will be mortgage-free. No loan!
We hope you enjoyed Ted’s lesson on how to find fixer upper homes.
There are several different venues to find fixer uppers at bargain prices, like foreclosure, HUD and USDA auctions.
However, the deepest discount prices on real estate are overwhelmingly found at tax defaulted property auctions.
Counties hold tax defaulted auctions in about half of the states in the USA. The other states sell tax liens or redeemable deeds.
Bidding on tax defaulted properties starts at around the amount of the back property taxes owed. When you take into account that property taxes are around 1% to 2% of the value of a property, you can see the possibilities.
You can get a property for 10, 20, or 30 cents on the dollar at a tax defaulted property auction.
In addition, the county wipes the mortgage off the property. So you can get a property at a bargain basement price, and also get it without a mortgage.
If you’d like to know more about how to find fixer upper homes at rock bottom prices, Ted Thomas can show you how.
There’s no one more qualified than Ted, America’s leading authority on tax lien certificates and tax defaulted property investing, to teach you how to do this.
Ted Thomas is the only one who provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops & web classes, and personal one-on-one coaching.
If you’d like to learn how to earn lucrative profits in real estate, you can get started today at no cost by taking advantage of Ted’s FREE Master Class and discovering how to find fixer upper homes at great bargains via tax defaulted property investing.