The agents below have given you a decent amount of information...and most are correct (with all due respect...unfortunately, some are not).
You must understand that when you see a property listed at 60-70k, it usually doesn't close at that price. Keep in mind that "CASH" is NOT always "KING". In the case of REO "Bank Owned" homes, many banks would rather have you finance than pay cash...depending on the bank that the buyer is using and which bank has it listed. They feel as though they will make more money in the long run in the event of another foreclosure, etc. Here are a few tips for making educated purchases in our dynamic market:
Why should I get financing (aka a mortgage)?
Better returns on cash. You will get better returns on cash if you get a mortgage. The average minimum required to put down is 30%. If you split your money into 3 properties, you will eek out about 50% more on your cash. Rents in Las Vegas support great returns and here are actual case studies showing cash verses loans.
You can hedge against a bad real estate agent. To get a loan, the property must be appraised by your lending institution. If your agent doesnâ€™t do a good job finding you a property at or below market, you can cancel a typical deal as there is usually a contingency for the property to be appraised above the loan amount. Contact me if you want a list of pre-screened agents who wonâ€™t waste your time showing you houses above market.
Cash is not king. Many banks want the loans more than they want to unload the property. Even if you are the highest bidder with cash, a bank would rather take a lower offer if they can get the loan. Johnny Lunch bucket with a loan from Bank of America can cut you down if the property is owned by Bank of America. Smart agents will know which properties are owned by which banks. Investors go insane when they discover they lost an offer even though they were the highest bidder. Conversely, if you have a loan with a national lender, you can beat other cash offers.
Hard money loans are not the end of the world. Does anyone remember the days when mortgages were at 14%? Hard money loans are generally at 12% â€“ stiff but not unreasonable. Even if you factor in a 12% loan, you will still get a better return on cash.
FURTHERMORE: You can succeed in buying bank foreclosures if you are prepared and hire the right agent.
First. Get your financials in order. Banks will not even look at your offer unless you have evidence you can purchase the property. Years ago, this wasnâ€™t necessary and there are investors who are still hung over from the good old days where a good credit rating or signature meant something.
Second. Find a good buyerâ€™s agent. If you are truly an investor, you want to work with someone who only handles investors. There is a substantial difference in the purchasing process between a primary home and an investment property. A good investment buyerâ€™s agent knows market rents, has resources for rehabbing properties and has the skills to find you a tenant. Contact us if you want a free list of pre-screened agents who have experience in purchasing foreclosed properties (702) 619-6214.
Third. Keep an open mind. Most investors who donâ€™t live in Las Vegas are misinformed about which areas to purchase in and what types of properties to purchase. Probably the worst source is a friend or relative who lives in Las Vegas. Unless a bad agent is trying to show you their company listings, you should be open to suggestions.
If you have any questions regarding the process of securing a home for the best price, then simply give us a shout! We would be happy to assist you. Also feel free to use our MLS SEARCH ENGINE to surf a few on your own at:
With you in mind,
LV Property Search