If you are wondering where to find below market value properties, this post is for you.
When I first started, I only looked at bank foreclosures. I would go to each bank and ask for their list of acquired assets. We compiled a list as thick as a phone directory.
Today, you can expand your search to include more sources of bargain properties to buy.
Here are four sources of below market value properties that you can check.
Where to Find Below Market Value Properties? #1. Sphere of Influence
Your first source when starting out can be your sphere of influence or the people you know.
Tell your family and friends that you are looking to get into the real estate business. The people you know are more likely to give you the “friend” or “family” discount. They are also more likely to get into flexible payment schemes that’s important in no money down deals.
Be on the lookout for idle and unused property. If its been neglected for a long time, they may be more willing to part with it for a small price.
Ask them if they own rental properties and if they still enjoy handling difficult tenants or fixing toilets. Or maybe they have problematic properties they would like to dispose.
Maybe someone passed away and the heirs are interested in selling their inheritance.
My friend, Maves Salva, built her Angeles Residence project on the problematic land his husband’s family inherited from his parents. If you have idle property, find a better way to maximize it’s use.
And who better to help your family and friends with their problem properties than you, right?
Where to Find Below Market Value Properties? #2. Referrals
If your sphere of influence does not have good properties to give you, they may have friends and family who do.
Expand your spheres of influence by tapping the spheres of your family and friends.
If an average person knows 250 friends, then you have access to more than 60,000 people in your network! There’s sure to be someone who will need help with their idle or problematic property.
Where to Find Below Market Value Properties? #3. Bank Foreclosures
Bank foreclosures are still a good source of below market value properties. There are 3 reasons why foreclosures are a great source.
- Some of these properties can be negotiated for less than the market value because banks only need to recover the loan value. Banks only loan at most 80% of a property’s value so you can negotiate to buy a property with a 20% discount on the market value.
- Many properties are not well-maintained and sometimes in terrible condition. This is good news because you have further ammunition to negotiate a much lower price.
- Banks do due diligence before accepting a property as collateral on a loan. This gives you assurance that the property has a good title. Recently a blog reader shared her experience in applying for a bank loan. She was denied because the property was in an area with an undeveloped road. The property also used substandard construction materials. If a bank approves a loan then the property passed their due diligence.
Today, you don’t need to go to each bank. You can check their lists online or better yet, you can head over to Jay Castillo’s blog – www.ForeclosurePhilippines.com – to see their latest lists. Jay has a searchable database of foreclosed properties making it easier to search.
Where to Find Below Market Value Properties? #4. Tax Delinquent Auctions
When a property owner doesn’t pay the amelyar or local property taxes, the local government can seize your property and sell it to another person through a tax delinquent auction.
There are two things that you need to be aware of when buying in a tax auction.
First, you pay in cash. You bring a small amount to join the auction and you pay the balance of the final bid price after a few days.
Second, you will have to wait one year before you can possess the property because there is a one-year redemption period. The owner can pay the final bid price plus monthly interest if he wants to redeem his property. If the owner pays, you will get the 2% interest per month.
A real estate investor shared valuable lessons learned when he attended a tax auction that you may want to check.
In this post, I shared ideas on where to find below market value properties. Check your sphere of influence and ask for referrals. Check bank foreclosures and tax delinquent auctions.
Finding a good property to buy can be exciting and challenging to do. Remember to be patient and don’t rush into deals.
If you need a step-by-step guide in making real estate deals, buy my first e-book, No Money Down Formula, How To Flip Properties With No Money Down.
May Your Deals Push Through,