5 Tips for Buying a House Cheaply (Like an Investor)

Do you want to buy a house at 30%, 40%, or more below “fair market value”? It’s certainly possible. Investors are using these strategies every day, across the country. The same techniques that work for investors will work for you–saving you a bundle of money and resulting in “more house” than you’d thought possible.

The strategies will work for anyone, so long as you have some patience and some flexibility in timing and location.

Note: These strategies will all work on properties listed on the MLS. They work even better for properties that aren’t listed. If you find a property that isn’t listed, that’s another advantage for you: You’ll have little or no competition for the property since it isn’t being advertised for sale.

Tip #1: Vacant Houses: Look for vacant houses. Because no one’s living there, by definition that’s a house that someone else (the owner) doesn’t need. He or she is somewhere else, likely paying a mortgage or rent on another property. Still, the vacant house is costing the owner money every month. There may be a mortgage, a line of credit, utilities, maintenance, taxes, and more.

Insider’s Tip: Some localities charge a lot more tax for vacant houses. Example: Washington D.C.’s residential tax rate is $0.85 per $100 of assessed value. That’s pretty good. But if the house is vacant, the tax rate soars to $5.00. If it’s a “blighted” vacant property, the tax rate is an incredible $10.00. Owners of vacant property in D.C. and many other places are highly motivated just because of that huge tax rate. If it’s listed on the MLS and has been on the market for perhaps 30 days, make a low offer. If it’s not listed, contact the owner and begin negotiations.

Tip #2: Bad Rental Properties: Real investors stake out the courthouse–specifically the landlord-tenant cases (usually held one day a week). Whether the landlord wins or loses, he/she may just want to get rid of the property. You might also find these properties’ owners by advertising online through sites such as Craigslist. Bonus Tip: Contact property management companies. They’ll know their properties with bad tenants, and they may know whether the owner is interested in selling.

Tip #3: Inherited Houses: These can be very similar to vacant houses. Sometimes they’re vacant; sometimes not. (If not, it’s usually a relatively living temporarily there.) Often, the heirs don’t have a use for the house, and they’re not interested in becoming landlords. Meanwhile, there are those recurring monthly costs, as with vacant houses. Inherited houses often aren’t in good, updated condition, and the heirs aren’t interested in spending thousands of dollars just to fix the place up. They want to sell quickly and get whatever money they can out of the house.

Investors check records at the courthouse and contact probate attorneys. You can do the same. Plus, tax records (which you can research, or have them researched by a real estate agent or a researcher) will usually show which houses are in trusts or have been inherited.

Tip #4: Absentee Landlords: These are out-of-town owners who’ve rented their house out. This is different from “bad rental properties.” In many cases, the tenants are OK. But the out-of-town owners are ready to “move on” or cash in on the property. They have much less of an emotional attachment.

Tip: Look for properties that have been owned by the current owner for 20+ years. These owners are more likely to be interested in selling, and have little emotional attachment to the property. They’re also likely to have more equity in the house, making them able to accept your lower-priced offer. A real estate agent can quickly research the tax records and find owners who meet these criteria.

An investor-friendly real estate agent can help with any of these. (Some investors use agents; others don’t. So this isn’t a plug for agents, but there are things they can do–such as pulling comps [determining the property’s value by looking at recent comparable sales]–that the average person can’t.)

As with any offer, the lower you go, the less likely the owner is to say “yes.” On the other hand, the owners of the types of properties listed above are much more likely to accept low offers than is the typical seller. These are the classic “motivated sellers.” They want to sell. In some cases, they need to sell. You’re offering a solution.

Tip #5: Property Condition: Many of these properties won’t be in great condition. Some will be completely livable. Others will be very dated (inherited houses tend to be) or damaged in some way (bad tenants). You should get a home inspection done and can even make the purchase contingent on a satisfactory home inspection. But be willing to buy the property in as-is condition. What you’re saying is that, if you buy it, you’re not going to ask the owner to make any repairs. (What you’ll do is discounts his/her offer to account for needed repairs and maintenance.) The sellers in most of these cases isn’t eager to do all sorts of repairs, and may not even have the money to do so. Make it easy for the seller: Buy in as-is condition.

Those are 5 strategies that investors use to find and buy real bargain properties. You can do the same thing.

3 Basic Factors to Consider When Buying a House

Buying a house has both become a dream and a necessity. It is one that is an ultimate inclusion in the bucket lists and dream lists of many individuals. One of the primary reasons being the great pride it brings. Yet, this is an endeavor where many individuals fail because they forget to consider the essential factors when buying a house.

Budget and other costs

Buying a house is an act that will involve substantial amount of money. Often times, it will involve your salary and savings. There are instances that you will have to borrow money from financing institutions in the form of loans and mortgages. It is very important to always consider your budget to make it suitable to the type of house that you will buy.

There are also other costs associated with buying a house. Processing of documents, closing costs, and the professional charges of real estate agents or brokers are just some of the additional costs you’ll have to shoulder to make your dream house a reality.

Ready for occupancy

Most often, those who want to buy a house are individuals who have long been staying in rental properties like apartments. Sometimes, those have been sent in other job locations are in urgent need for a house to live in. The availability of the house or its readiness for occupancy is something that you should also consider. You would not want to have paid for the property and still wait for a month or more before you can enjoy the comfort of life it brings.

Home inspection services can help you determine if the house is in a good move-in condition. Repairs and other flaws can be determined and thus be charged against the seller rather than having them charged against you.

Extra things and services

When buying a house, you should not only consider the state of the house itself. There are outside elements too such as the lawn, the patio, the garage, and the rain gutter. These parts may require simple makeovers that are costly too. It is important to see whether these parts require utility services. Determine them properly and have the seller patch these things up before you move in.

The lawn might require some trimming while the patio might require some replacement of the bricks. The car port’s roof might be screaming for some sealant action while the rain gutter may need some improvement including the replacement of guard systems. See to it that pipes, faucets, and sinks are working properly and that they are free of leaks and clogs.

These are just some of the basic factors you should consider when buying a house. Careful consideration of these factors shall award you the benefit of moving in a house that is according to your budget.

What Questions Should I Ask When Looking to Buy a House?

When it comes to buying a house, you definitely should not judge a book by its cover. When you attend an open house or have a private showing of a house you are interested in, it’s important to ask some pivotal questions.

General Questions

The first questions should be addressed to the homeowner. Why did they buy the house and why are they selling the house? If they have to relocate because of a job, you may have an opportunity to bargain more on the price if they are running out of time. If they are selling because of financial trouble, you should pay careful attention to see if they have kept up the property if funds have been low.

Asking how they have liked living there, specifically what they have liked the most and the least. This will give you further insights before you buy a house. Pay attention to what they say as well as how they say it to determine if there might be any hidden issues.

Home Condition

Whenever you look at a house to buy, take a checklist with you to remember what to ask and to record the answers. Here are the specific areas you will want to check before you buy a house:

Appliances – How old are appliances in the kitchen and laundry room? Have they had any recent repairs? What about the hot water heater, air conditioner and furnace? When was the electric and plumbing last updated? Have they been serviced regularly.

Roof – how old is it? You can expect a roof to last 15-20 years.

Insulation and Windows – How old are the windows and is there adequate insulation for the climate. Are all areas insulated, especially attics and crawl spaces? This will affect your heating and cooling costs.

Warranties – Which appliances, systems, windows, etc. are still under warranty.

Location

You should find out as much about the neighborhood as possible before you consider buying a house. Here are some key questions:

What have similar homes in the neighborhood sold for in the past year? And what are the asking prices for other homes currently for sale? This will help determine if the house is priced according to market value.

What other non-residential buildings are nearby? Are there apartments or businesses close by? This can affect the home’s resale value.

Are there schools, restaurants and retail nearby?

Is the neighborhood quiet? What age are the neighbors? Are there train tracks or airports nearby?

Sale/Financial Issues

The last set of questions relate to the sale and financing when you buy a house:

How long has the house been for sale? Was it for sale in the past and went unsold? Have there been any price reductions?

Have you had offers on the property yet? This will let you know how eager the seller may be. It will also tell you what offers to buy the house have been rejected.

By asking these important questions before you buy a house, you will know whether it meets your needs and you will be able to make a fair offer.