9 Tips for Investing in Contra Costa County Foreclosures
Contra Costa county may be always on the up and up, but there are still very good opportunities for foreclosure investments. When you sell, or when your property is out on the rental market you should be ready to see the results. But good long-term revenue takes a little work.
These nine tips are for anyone, seasoned or newby, interested in Contra Costa’s real estate market. There are dozens of opportunities but finding the right one requires that you shop carefully, do your due diligence and be ready to jump on the right opportunity.
These are nine of the most important tips we’re regularly advising investors to follow.
- Start Early. Don’t plan on buying immediately – but start your research on Trulia , for example, and keep at it. You want to be able to develop a general idea of what prices are, and when and where they are likely to change.
- Take Advantage of Current Mortgage Rates. Short-term and long-term mortgage rates are excellent, but you should shop around here too. Your own financial picture and what you’re hoping to do with the property could put you in the market for a higher payment and a far shorter term. And of course, being preapproved is not only a terrific shot in the arm, but can be absolutely necessary for buying a bank-owned property.
- Plan strategically. Understanding what prices are and where they will go doesn’t mean you can work miracles. Renovating a foreclosure above the going rates in a given neighborhood is always a bad idea. Buyers who want a more expensive property will simply go to a more expensive neighborhood.
- Shop solo. No tours or group outings to distressed neighborhoods. The risks of not only for bidding wars, but of muddled “group-think” – and even friendly competition – are simply too high. If you do want to hash things out, speak with a neutral advisor, rather than with a competitor.
- Location. It may be the oldest tip in the book, but if your planning on renting a property out, and managing it yourself, then you’ll want to carefully consider how far you’re willing to drive. In general, a property management company should be able triple or even quadruple the area you’ll be able to cover. RealtyTrac generally has some of the best statistics on the Contra-Costa county scene, and on many others besides. Don’t forget to check the rental rates in an area too, not only for median rental rates, but
- Distressed Neighborhoods! – Taking into account the above, a neighborhood with a lot of foreclosures is probably not going to offer much return on your investment. That’s another reason to avoid the tours or investment groups.
- Stay ahead of Default Notices. Contacting a homeowner before a Notice of Default is posted is not necessarily a bad idea. Competition after a default notice appears will frequently heat up the price After the NOD appears in the papers competition for the property can heat up. Current owners may accept an offer specifically to avoid foreclosure and this can mean a very good opportunity for you. Short Sales though, those where you offer even less than the balance due on the mortgage, will need the go-ahead from a lender.
- Repairs! Vacant or distressed properties often need considerably more repair and rehab than happily inhabited homes. Be prepared. You won’t be able to negotiate a better price as most foreclosures are sold as is.
- REO Properties. Though the opportunity for something really below market value is not so good, bank-owned properties sold through a Real Estate Brokerage are the safest. Lenders with a bigger inventory are more likely to respond to your offer and let some properties go at levels below market value, if not at a truly terrific price.
One final thing to understand in buying any foreclosed property is that the seller – is a bank! Their job is simply to get as much money as possible. Discounts tend to max at about 8% of a list price. And banks are frequently unable to accept or refuse offers at anytime other than normal “banking hours.” That can be a real drag when you spot a good deal over the weekend. Remember that mortgage pre-qualification letter or proof that you have the funds (if you’re paying in cash) is essential to getting nearly any offer accepted.
If you have questions or to learn more about investing in foreclosures and property management services in the area, contact Best Property Management, Inc.