STOP PRESS: Investor Finds Bank-Owned Bargains Galore!

I am (temporarily) shelving today’s post because a very interesting e-mail arrived in my in-box last night.

 It was an e-mail newsletter from a foreclosure and real-estate listing service that I use, called RealtyTrac.

This particular article caught my eye, because I love anything that shows that real money is made when you ignore conventional wisdom; the headline read:

Investor Finds Bank-Owned Bargains Galore

“I just bought two brand new homes as REO from the bank,” said a Tennessee-based investor [Kirk Leipzig] in December. “I am buying five more new homes next week from the bank. I am buying $750,000 homes for $450,000 … This is the time to buy, and to make a killing out there,” continued Leipzig, who’s been a RealtyTrac subscriber for about nine months. “But you need to totally understand your market and educate yourself daily on your market. Then go buy, buy, buy.”

What’s most surprising about Leipzig is that he is not buying and holding – as many experts recommend in a down market – but buying and flipping.Now this really goes against conventional wisdom i.e. “housing prices are low … they can only go down … nobody is buying … you will be stuck with real-estate” …Maybe all true … maybe not … who knows? But, this guy has an answer for all of that:

“All the properties I currently buy are for flipping only,” he said, acknowledging that he always has a backup plan because of the difficulty selling in the current market. “I always buy a property now to flip, but in the back of my mind I know I can lease-option it, or rent it if it does not sell as quickly as I would like.”

I have to admit that ‘flipping’ real-estate is not in my particular comfort zone – I have never flipped anything (unless you call ‘buying’ majority share in a business for $0 down and ‘flipping’ it 18 months later for $6 million … but, that’s another story) …

However, for those of you looking to take some risk in what I would call The Business of Flipping Homes” as a somewhat risky way to make money in the short term (i.e. with a possible very large reward if you can replicate what this guy is doing) in order to then INVEST the excess proceeds into your long-term INVESTING (i.e. buy and hold) strategy, this just may be worth considering?

Whether you try and replicate what this guy does, in your own market, or try something else entirely different in the real-estate field “you need to totally understand your market and educate yourself daily on your market” …

… then, don’t just sit on your thumbs along with the rest of the herd … do as this successful business person does: go buy, buy, buy!

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8 thoughts on “STOP PRESS: Investor Finds Bank-Owned Bargains Galore!

  1. AJC.
    I’m planning on buying a condo soon in Westchester County, NY. Fixing it up a bit and renting it out. I also plan to use the software you suggested to find this property to buy, but how would someone “educate themselves daily on the markey”? I keep an eye on the 30 FMR and am impressed with rates right now but I’m wondering if there’s more to this education.

  2. @ Joshua – Congrats! Find a realtor who will send you ‘comps’ (i.e. comparable sales) on condo sales in the area from the MLS; try and find how the market has changed over the past couple of years; do the same with rental ‘comps’ … physically look at a number of condos before choosing one. Now, THAT’S educating yourself on the market! Good Luck 🙂

  3. AJC,
    Thanks, for the advice. I wasn’t sure I could get comps on my own or I needed a realtor, so I’ll get in touch with one asap. Thanks again, I really appreciate the help.

  4. @ Joshua – It shouldn’t cost you anything to have a Realtor acting as a Buyer’s Agent (they should split commission with the Selling/Listing Agent), so it could be a good idea!

  5. Did he mention if he is financing these properties or paying cash etc.

  6. I have been a pre-foreclosure investor for over 5 years and have shifted my business model to purchasing REO’s and selling them at below retail prices. This strategy is looking to be very useful in the current environment. As the banks dump more inventory it will only get better.

  7. @ Dick – Thanks for your comment … if anything, I am a ‘boring real-estate investor’ buying stuff that seems to make sense at the time, maybe renovating/rehabbing then holding/renting for the long-term. Foreclosure and REO strategies can accelerate IF you do it right … right? I view this more as a Making Money 201 business (i.e. buying/selling) than an Investment.

    BTW: I had to remove your links because doesn’t allow any type of ‘advertising’ … and the link to your blog was ‘broken’.

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