along with LexisNexis in automated databases to constantly generate high quality target lists. With the new offering from First American, some effort, experience, and skill, you can produce a list nearly as good.
Once you have your target list, it's also a good idea to perform a few other searches and processes to
narrow it down to viable properties. First, mapping the properties is a good way to get a sense of what you are dealing with. Tools like Google Earth and Virtual Earth are free and easy to use. More sophisticated solutions such as those from Trade Area Systems provide an excellent vehicle for in-depth analysis. Importing data and comparing to census and other data is a great start. Looking at your targets compared to mortgage risk zones from PopStats can help you find diamonds in the rough, or even better, diamonds in good neighborhoods.
Now that you have your target list, you need to start the more meticulous part of the hunt. This involves a deeper analysis of each property, carefully looking into the situation to ensure it is worth the effort. You don't want to start something you can't finish. Look for issues clouding the property such as active lawsuits, possible public works projects, crime statistics, etc. If you have already determined the locations of each property on a map, simple Google searches can help uncover important news. Conversations with businesses in the area of the target property can shed more light on the neighborhoods as well. Remember that many problems create opportunities. If the current owner bought the property under one set of assumptions, but the situation changed and they are not able to adapt, too bad for them. You may have different ideas for the location more in tune with the realities.
The data from First American in this example contains records where the maturity date of the primary or secondary debt is within the next 18 months. In these cases, balloon payments for the outstanding balance are coming due soon and the current owner may be having trouble refinancing the full amount. There are two approaches you could take to purchasing such a property. The first is to negotiate with the current owner for an amount up to the balance of the mortgage thus allowing the owner to exit the property without taking a significant hit. A better approach is to negotiate a takeover of the loan, from the lender, at a discount. In this scenario, you could then receive full payment from the current owner and pocket the amount of the loan discount as a quick profit. If instead, the owner fails to make a full payment, you could take possession of the property, effectively purchasing it an amount less than the outstanding mortgage. In either scenario, you will need the services of an experienced real estate attorney to ensure the terms of the purchase adequately protect your interests and to explain the risks.
Throughout the process, you will need to stay organized. Excel is sufficient for the initial work, but once you have created your target list, use a well structured property database such as Leo Software to manage the many important details of each property and conversations surrounding the negotiations. Of course, the benefits of working with a skilled and experienced real estate researcher can make the entire process more efficient and effective. Please give me a call to discuss further at (617) 304-2689. If you have the necessary drive, you can win big in a down market.