How to save money on real estate investment repairs

As a real estate investor, there will come a time when you will begin to see certain repairs over and over again.  From fixing sinks to laying carpet, the nuances of owning real estate can be pretty overwhelming, if you let it.

Knowing little secrets of the trade and being able to get things fixed at a lower cost will save you time and money.  Here's a few things I know about flooring that may save you some cash!

Carpet Replacement

Without fail, carpet repairs and installation will always be one of the most common and most expensive things you will come across during renovation or re-leasing time.  Being able to save money on carpet can significantly change your cash flow and your overall income on a property.  Here are a few ways you can save on carpet or speed up your renovation.

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HUD Homes Are NOT Hard To Buy!

There is a common misconception that HUD homes are trashed out, dilapidated and often times totally worthless.  This could not be further from the truth.  Many HUD properties require minimal repairs and can be discounted by far more than it will cost to make the repairs. 

On occasion, there will be homes with foundation issues, mold, or water damage that most owner occupants will not be able to pay cash for, or can not get a mortgage company to finance, so keep your eyes out for these deals.  I have bought and sold many HUD homes with profits ranging from 20% to 30% and even 75% on one occasion, so don't think that it can't be done. 

What is a HUD home?  A HUD home is a property that was once purchased with a Federal Housing Administration (FHA) loan and is now foreclosed.  Once the home has been foreclosed and the principal balance paid back to the mortgage lender, the home is then sold at auction by the Housing and Urban Development (HUD) at near or close to retail value.

There is a 10 day window at auction for owner occupants to first bid.  If the home is not sold within the first 10 days of the initial offer period, investors can then bid on the home.  Once a offer has been accepted, the buyer will be notified usually within 24-48 hours.  

It takes anywhere from 25-45 days to close on a HUD home although I have seen this extended further on occasion.  HUD is very particular about keeping a strict time line on closing, so you have to get the inspection completed and have your financing in place as soon as possible.

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There are a lot of new investors that never get past the step of searching for investment properties.  For many, it is due to not finding the deal fast enough or someone else beating your low bid on a home.  Why do some make it in the real estate business and some don’t?

Quite simply, the successful investors are the ones that either know something you don’t or do something you won’t.  It is not that they have a secret website that has all the good deal and you can’t get to it.  They are however, following up on the ones you wont or trying something you have not.

For example – Lets say your online looking around the IRS home seizure website at: http://www.ustreas.gov/auctions/irs/ and you found a home that you were interested in.  The beginning investor would write down the address, do his due diligence and find out as much about the home as he could and go to the auction.

A seasoned investor would do all of the same things as the beginning investor accept one important thing.  He would not go to the auction, he would try to acquire the property before it ever hits public access.  How?  Call the owner and find out why it’s being sold.  In this particular case, the IRS may have a lien on the property for non-payment of taxes.  If this were the case, maybe you could bring the taxes current and have the owner sell the home to you in exchange.  What an idea! 

Another example could be that you found this gem of a website that has a huge amount of homes for sale that are drop bottom prices.  The only problem is that to access the full address, you have to pay ten dollars a month.  The nerve of them!  Asking you to pay for services rendered!  So, what do you do?  Well, maybe they are dumb enough to give a street name, or a subdivision name.  Use this to your advantage instead of quitting just because there is a fee for finding the home.  Whether you are willing to pay or not, try and find ways to obtain information without the help of a service provider.

You could find the local tax assessors website and look up the street name and see which house is owned by a bank or trust.  You may even decide to call a local realtor and ask him to pull all the houses on a area and see if it matches.  Or, try cross comparison of the same house on another foreclosure site and see if each one may reference the same home.  This may point you closer to knowing what house is for sale; and by whom.

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