Posted on Aug 26, 2018 by Curtis Roddy
Getting started with investing in Texas Foreclosure Properties
(Part 2 of the series “So You Want to Invest in Texas Foreclosures”)
So you’ve decided to jump into the Texas foreclosure market. To be successful, it’s best to follow a few guidelines before making a purchase. (If you haven’t already done so, please be sure to first read the introductory blog post “Why Invest in Texas Foreclosure Properties?”)
My father, George Roddy, had an uncanny ability to foresee trends and know just where to invest in real estate. But he was an unusual man. Most investors (myself included) must take a methodical approach—and that means developing a system. In this blog post, I’m going to take you through 5 simple but essential steps to help you prepare to purchase property.
Why is this important? Even if you’ve got cash on hand and are eager to head to an auction, there are important things to keep in mind before you invest. If you follow these steps, you’ll have a very good chance of purchasing properties that help you attain your financial goals.
Choose your region. Where in the state do you want to invest? Most people find it practical to choose a region that’s near them. Keep in mind that foreclosure auctions are held at county seats, so you might want to start with a county whose courthouse is closest to you. You should also have an idea of what kind of area you want to invest in, whether you prefer to buy a property in an urban, a suburban, or a rural area.
Decide when you’ll invest (before, at, or after auction?). Most people make this decision based on what kind of financing is at their disposal. If you have ready cash, then you’re in the most flexible position and can go for a property at any time. If you can’t make a full-cash purchase, then you’re looking at buying either before or after auction, since at-auction purchases require you to pay in cash or with a cashier’s check.
Determine what is your ideal assessed value and age of the property. These are 2 important criteria that will affect what you pay for purchase and what post-purchase costs you might incur. Typically, a foreclosed property will usually sell for about 60 to 90 percent of the assessed value. You can pay less for older properties, but this can also mean higher repair cost post-purchase.
Review properties that might be a fit. Now for the fun part: shopping for properties that align with your parameters. Most experts recommend that you make use of a good listing service rather than try to do this on your own, and if I may toot our own horn, Roddy’s Listing Service is especially investor-friendly. Our simple query page allows you to enter all necessary criteria and generate a customized report. As you fill in the page, I recommend that you narrow your criteria so that you end up with about 20 properties. (To see a primer on how to use the query page and generate a report, check out this 5-minute video.)
Conduct title and market research for each candidate property. You’ll want to make sure there are no notes, liens, mortgages, or judgments that could interfere with the purchase process. For this, I recommend that you contact a professional title research company. Second, you’ll want to conduct a comparable sales analysis to verify the property’s worth if it were to be sold on conventional market. Again, I recommend you turn to a professional, such as a realtor. Feel free to call our office at (972) 250-0993 for a list of referrals.
DON’T MISS THE NEXT POSTING OF THE RODDY BLOG: “Purchasing a Distressed-Debt Property”
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