Picking up a property at a deep discount can be tricky. The question is, how do you measure how much of a discount are you getting?
If you consider that a property may have sold in 2004-2005 for $400k and today it may sell for $200k, are you buying it at 50% discount? What if, because of today's market, that same property now sells for $300k? If you bought it for $200k, do you still feel that a 30% discount is substantial or are you still looking for that 50% margin?
Today's market offers many great opportunities for anyone smart enough to realize we may very well be at a bottom (another elusive concept, though I happen to believe we are for the most part, at the bottom right now), and decides to get out of the sidelines to become a player. However, you need to evaluate what it is you trully want to achieve.
Do you want to own ocean front real estate in Miami because of the enjoyment you plan to get, because of your long-term investment strategy, or because you simply feel you can purchase at a bargain price?
Price is nothing if the property that now sells for $400k used to sell for $600k in 2005 and you are not very likely to pick it up for $200k and you could not afford anything higher.
Today's $200k property was probably worth some $300k-$400k or more just a few years ago. However, the process to acquire such bargain may not be something you'd like to entertain.
Typically, you will find that something so undervalued may have other several issues for you to consider before making an intelligent decision. You may want to consider the obvious like building, location, ammenities, builder's viability, association's financials and the like. Also, consider that some (or many of these units), may require renovations, some even extensive.
If you are not prepared to do renovations or buy in a building that, although new, may be having some trouble (financially insolvent or any number of other possible considerations), which may cause you to own it for longer than a building not in distress, then perhaps you should re evaluate your expectations.
Another important factor to consider, specially if you think you be going after a short sale or REO, is the Realtor you work with. Choosing a professional who is a Certified Distressed Property Expert will go a long way in ensuring you get the most bang for your buck, with the least amount of pain to you, the bank and the seller.
Many claim to know what they're doing, but trust me when I tell you, this is not the case. A CDPE (whomever you choose), is more likely to get you to your destination than someone who is not.
Good luck with your decision and happy hunting.
Wenceslao Fernandez Jr, BS, CDPE
Keller Williams Miami Beach Realty