Fun afternoon looking at REOs

[T Brown]

I'm still looking for my first property. Had a great afternoon yesterday looking at REOs and just had to share (no one else will understand my excitement, but I figured you guys would). I had picked five properties for my agent to show me.

One was now under contract, so no go.

One was in a nice neighborhood, but when we got there it had a mold warning on the front door, so another no go.

One was in a marginal neighborhood and needed work, but was only $25k. I don't think I want to rent in that area, so another no go.

One was on a nice street, had a nice layout, and didn't need that much work. We started looking around and realized the copper pipes had been stolen from it. Looks like the owners are trying to do something about it, though. They had put BathFitters in the shower, had installed a new security system, etc. Nice house, but still not a show-stopper at $54k. If I could get it for $40k, it would be a good deal. I'll be renting out at $800/month.

Last one was the real steal. Only $24k, nice street, nice house, great yard, great deck. Smoke damage from what appeared to be either a squatter or previous owner before they lost the house. They had been using candles to light the house (no electric), and there was minimal damage to a banister post where the candle had smoldered. All of the walls are streaked with soot and the carpets are a disaster. After we looked at it the agent looked at the printout and notes and said, "Oh, there are multiple offers on this one." Someone is going to get a really nice house and make a lot of money!

I'm sort of jealous I didn't get that one, but had a great time looking at the houses and I'm feeling good about the prospects. Looks like there's a lot of competition for the really good deals, so I'll have to step up my game. :-)

[Mark H.]

I think looking at tons of properties (especially those with pending offers) should be a mandatory exercise for a new investor. It helps you learn to spot the "diamonds" yourself.

I understand the economics of why real-estate agents can't really take every investor to a hundred properties, but looking at lots of properties (especially with an experienced agent pointing out the benefits & flaws) can help you decide where and what to buy.

Once you've seen a wobbly roof, a wonky foundation, and lots of cobbled repairs, you learn to look for those subtle signs of trouble for yourself.

I think the only experience that would add more value is following an experienced rehabber through the process of bringing one of those properties back into rentable condition.

The only mistake here, and it's a minor one, is expecting to find a diamond on your first trip. In my area, there are thousands of full-time investors, (many of them are agents), scouring the MLS daily for deals - you're not going to roll into town on Friday and get a better deal under contract on Saturday without a huge amount of luck.

If the op is anything like myself, building up that first cash "bullet" likely took years of saving & sacrifice - there's nothing wrong with taking the time to "aim" that bullet & put it somewhere where it will count.

The first deal or two will determine whether you're gloating or running away from real-estate while rubbing your behind. Kudos to the op for *not* signing an offer yesterday!

Fwiw, I do understand your excitement, that's part of the reason I got my own real-estate license. Being able to help myself, my friends & my family get good properties at decent prices is enlightening. When you realize that you don't *have to* spend 50% of your income on housing, life gets easier. When you can start collecting checks at the end of the month instead of writing them, you'll be hooked forever!