REO tips for a cash buying newbie?...

[Jay Gray]

Hey all....

I'm just starting out. I'm basically just looking to get bigger pockets :)

Northern California based, I do not currently own any property & have zero debt. I have about $500k cash liquid + 100k/year++ job.

I come from a family of DIY'ers, and a couple of my family members are retired (who are very handy) are interested in helping rehab houses. Mostly for something to do... lucky me! I'm also looking for something for myself to buy and occupy.


Any hard learned tips or words of caution for the cash buying newbies here?

Also, I've noticed there are many bank sites out there that list their REO's.... are there any good (free or pay) sites out there that routinely aggregate this data? If not, I'll put something together soon (programmer!) ;)

Thanks in advance for any tips!

[J Scott]

Assuming you are prepared to buy (i.e., you've done your research, have a plan in place, etc), the best advice I can give if you want to focus on REOs is to find a great buyer's agent who is experienced in working with investors and is experienced with REOs.

This person should be able to accomplish a lot of things for you:

1. Teach you the process of buying REO properties. REOs are a different beast than typical sales, so understanding the complexities of these transactions is very important;

2. Help you find properties. Most REOs are listed on the MLS, and your agent will likely understand the importance of acting fast when it comes to buying REOs. So, s/he will likely send you a daily update of the properties available, those with price drops, etc;

3. Provide comps. This agent should be able to provide you detailed comps for the houses you are considering. S/he should also be able to perform the comp analysis for you (if you don't have the experience) to help you determine an accurate ARV;

4. Due diligence. This agent should be able to help you through the due diligence process, from beginning to end.

5. A really good buyer's agent will help you evaluate specific investments and areas, and should be able to point you to properties that will prove to be good deals.

So, my best tip is to find a great buyer's agent. To do this, talk to other successful investors in your area, and be very diligent when you interview potential agents. There are a lot of bad ones out there, but the good ones are worth their weight in gold...