Well, there’s no doubt about it:  it is!  Why then isn’t everyone cashing in?  Being “in the know” is a key factor in wholesale real estate success.  Perhaps the biggest challenge is in constantly prospecting and locating the types of properties that will yield profits to begin with. There are several ways to do so:

• Look for short sale or pre-closure type properties – these can be found through a real estate property agent.  

• Network – Work directly with the type of individuals most likely to offer these types of properties: rehabbers, homeowners, landlords, etc.

• Bank REOs – these can be found through real estate property agents as well.

• Volume purchases through different banks or institutions. 

By taking the above steps to uncover opportune investment properties, staying motivated, and keeping in touch with real estate procedures, financing, laws, and the local market, wholesale investing can reap a great reward.

How To Get Started

If starting out in this type of endeavor for the first time, it may help to partner with a more experienced investor than you.  Many more experienced investors would be willing to work with a “newbie”, sharing tricks of the trade in exchange for the bit of leg work and research needed in acquiring discounted properties.  Contacting a real estate agent is another big step in establishing a consistent source for wholesale properties and being privy to current market opportunities.  

If you’re up for learning where to acquire wholesale real estate and how to finance it, and have the willingness and ability to be consistently motivated, you will soon become the source of profitable real estate investments through wholesale real estate.  

The real estate market has been in decline for a few years now, but that can be good news for people looking to buy real estate in Central Florida.  In fact, when a market is in such decline, it is referred to as a “buyer’s market”. Prices across the country are now stable and lower than ever. Interest rates are also lower, which can mean thousands in savings over the years.

Own Instead of Rent

There are many advantages to buying real estate — especially in today’s market. From the tax savings, to lower monthly costs, to owning something with actual value and room for future market growth, a buyer cannot go wrong. 

Many people overlook the fact that rental payments include taxes and fees, charged to the landlord or by the landlord, that are passed on to the tenant. When someone owns their own home, many states offer tax exemptions or discounts to homeowners, which equal huge savings each year. 

Mortgage payments are usually cheaper than paying rent, too. Landlords charge tenants more per month so that they can make a profit on their property and sometimes there’s also extra to cover any necessary repairs. A homebuyer can negotiate a price and pay rock bottom without any built in charges for a more personal home.

The Value in Real Estate

Real estate ownership is also like having a long term, high yield, savings account. As the value of real estate property increases, the amount of money the owners have at their disposal increases.  

Buying a home means buying something with actual, or real, value. That’s why it’s called “real” estate. Unlike personal property, which usually loses value as it gets older, diminishes in quality, and loses desirability, real estate will always have worth. That worth grows exponentially over time.  

Buying real estate, whether it’s a newly built home or an existing home, is a completely customizable experience. When renting, there are usually a lot of rules about painting the walls, hanging art, or getting permission to do practically anything to modify the place. With ownership comes the ability to make the property 100% personal. 

There is no better time to buy than now and there is no better investment than real estate. 

Real estate owned properties (REOs) are foreclosed properties that are owned by a bank. Why are these properties owned by banks?

1) Because the homeowner was unable to pay off the mortgage.

2) Because the property failed to sell at a foreclosure auction.

Central Florida REOs are attractive to for several reasons. One of the most important advantages is that all of the home’s liens (property-related debts) are removed once it becomes an REO, and all of the property's taxes are paid in full.

Some Wonderful Advantages to Buying an REO

•    REOs can and should be inspected prior to signing a contract.
•    The lending bank will always restore the REO to at least stable condition.
•    The bank lender will often offer an allowance for certain repairs to the home.
•    Most REOs will include appliances.

All REOs will either be sold by the bank itself or through an established broker. As a result, buying an REO requires a specific body of knowledge and expertise. Make sure you find a real estate agent with REO experience.

Since REOs have been passed up at a foreclosure auction, and they are typically in need of some repair, they may be purchased at an extremely low price.

The Central Florida real estate market is home to a variety of real estate owned properties. Whether you're a family looking for an inexpensive gateway into home ownership, or you're an investor looking to flip a home, REOs deserve your attention.

For more information, check out the U.S. Department of Housing and Urban Development.

Whether you're a relocating family or an investor looking to make money flipping homes, Central Florida foreclosures deserve your attention…especially the homes in Downtown Orlando. Buying a foreclosed home will afford you the freedom to make lovely interior adjustments, colorful landscaping upgrades, and a variety of other property embellishments.

What is a Foreclosure? A foreclosure occurs when a homeowner is unable to pay their mortgage. Because of this delinquency, the mortgage lender (bank) assumes full ownership of the home. This bank-owned home is referred to as a "foreclosed home".

If you are considering buying a foreclosed home in Central Florida, examine the following:

•    Understand the Advantages: Lenders want to recover the unpaid amount of the home's mortgage as soon as possible. As a result, many foreclosed homes are sold at significantly discounted prices. Sometimes, a foreclosed homes will sell for 30-40% of its market worth.

•    Inspect the Property: Some foreclosures are left in a state of disrepair. This is not necessarily a bad thing. Just make sure that the cost of the repairs will be be overshadowed by the value that they will add to the home.

•    Find an Experienced Agent: Buying a foreclosed home requires a specific body of knowledge and expertise. Find a real estate agent that is well-versed in the foreclosure market. Furthermore, some banks won't even sell to unrepresented buyers.

•    Know Your Credit Score: Examine your credit report. Make sure to correct any outdated information or previous defaults.

•    Understand Property Liens: Find out if the foreclosed property is attached to an liens; most notably, unpaid property taxes. If liens exist, find out who is responsible for them.

•    Paperwork: When purchasing a foreclosed home, expect more paperwork. Buying a home from a bank or government agency is a much more rigid process than buying from a real estate agency or directly from homeowner.

•    Compare: Compare the costs and advantages of a foreclosed home with other foreclosures and other new properties. Cross-analyze the cost of any estimated repairs with the discounted home price.

Once you've examined the pros and cons of purchasing a foreclosed home, then get ready for the thrilling sensation of owning a new home.

Who Gets What?
First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?
The amount of income someone can earn and qualify for the full amount of the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible fort FTHB Tax Credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.
This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.
As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?
The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.
According to the IRS, factors that would demonstrate the ownership of the property would include:
1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?
Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
They do not use the home as your principal residence.
They sell their home before the end of the year.
They are a nonresident alien.
They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?
Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?
Yes, provided that the child meets the other requirements for the tax credit.

The obvious advantage of a FSBO home is the fact that you won’t be paying a percentage to a real estate agent. The entire transaction takes place directly with the homeowner.  Some of the additional advantages to this type of purchase include the following:

•    Financing:  Some homeowners are willing to do their own financing. For individuals currently experiencing credit problems, this can be an ideal way to buy. The contract can be drawn up a number of ways, but the most common is to give the current homeowner an agreed upon down payment and then make payments directly to the owner for a number of months or years until bank financing can be obtained.
•    Negotiations: Another plus to purchasing a FSBO, is having negotiation options. Dealing directly with an owner does allow more room for negotiating a purchase price or even certain items that should remain on the property.
•    No waiting period: Usually a home purchased through a real estate agent has a 30 day waiting period while the house goes through the closing procedure. With a home that is for sale by owner, the move in date is determined between you and the seller.

These are all excellent advantages to take into consideration. The most difficult part of purchasing an FSBO is finding them. Instead of one MLS database, you’ll have to search local newspapers, online ads, Craigslist and even resort to driving around your desired neighborhood in search of these sometimes hidden gems.

If you are not planning on working out financing with the seller, but will need a loan, it is wise to get pre-approved from your lending institution. Having a letter of approval will let the seller know you are a serious potential buyer and will put you at the front of the line when making an offer.

The following tips will guide you through the steps you’ll need to take to finalize your purchase:

Obtain a valuation report of the home. Since you won’t have a real estate agent to supply you with a comparative market analysis on recently sold homes in the neighborhood, you’ll need to do this part yourself. A property valuation can be obtained online. When purchasing one, be sure it includes the following:
•    Estimated Market Value based on at least 10 recent comparable sales
•    Up to date property information
•    Neighborhood and school reports
•    Tax Assessment Data
•    Home information: Lot Size, Square footage, Legal description, Sales History

Before making an offer you may want to hire a real estate attorney, especially if this is your first ‘for sale by owner’ purchase. You’ll need counsel and direction to lead you properly from the initial offer through the closing process. A real estate lawyer can keep you from making costly mistakes.

Once you make an offer to the current home owner, be sure to lock in your mortgage rate with your lender. There is generally a 30 or 60 day lock in that will allow you to close without worry of rising mortgage rates.

One of the final steps is your home inspection. This generally costs a few hundred dollars and is well worth it. The inspector will carefully document every detail, from non-working outlets to potential structural problems. Depending on the results of the home inspection, there may be room for a renegotiation. If certain appliances need to be replaced or repair work is in order, the purchase price should be adjusted accordingly.

Assuming you have hired an attorney, most of the final details and paperwork will be handled for you. Purchasing a FSBO home can be an easy step by step process that saves you thousands of dollars if handled properly.

From 2003-2004, Florida real estate emerged as one of the hottest markets in the nation. Prices quickly began to soar as developers and contractors started investing. By 2005, property values had appreciated by 45% in one year. No one really looked at the obvious end to the price escalation and everyone was buying high in fear that they would never again be able to afford a home in Florida if they didn’t. Builders were backlogged with two years worth of work.
The market began to slow down in 2005, but the buying frenzy continued until the bottom finally fell out in 2007. The ease of obtaining a mortgage only added to the amount of purchases. By the time the dust settled, the foreclosures and short sales began to drive the prices downward. Homes that were valued at $250,000 just a few years ago, were now selling for $80,000, which brings us to where we are now.

The pendulum has swung both ways and now is the time to invest before the market makes its second climb. Sales for 2009 have already increased by almost 40% over last year. Prices are still well below value, but as buying trends continue, prices will eventually balance out with the true replacement value of the homes. This is where the smart investor can take advantage of the current pricing and profit from it. Obviously if you can’t build a 2,000 square foot home for $80,000, the market has overcorrected and will balance out in upcoming months.

How to Get the Best Investment Deal

Short sales used to be a time waster. Recently, banks have begun to use short sales as a way to avoid costly foreclosures. This is the reason why many homes are still occupied by individuals who have not made a house payment in months. Foreclosures can cost the bank as much as $50,000 and they are in no hurry to lose money. As soon as the market begins to pick up and home values increase, short sales may pick up speed.

This is only one option. There are plenty of good deals to be found right now. Depending on when a seller purchased their property, you can still find excellent pricing from a ‘for sale by owner’ deal. If the property was purchased before the sharp increase of 2003, you may be able to purchase at a good price.

In order to obtain the lowest price in today’s market you should search every option, including short sales, REO’s, the MLS and even buying at the courthouse door.

According to the National Association of Realtors, the lending crisis is almost past and the rest of this year will be about cleaning up the mess that was caused by it. Homes are at the lowest prices in ten years but are expected to increase within the next several months. Now is the time to invest.
Whether you are looking to invest in Florida properties to resell or to hold on to as rentals or personal retirement, it is a good time for buying investment properties in Florida.