Hi, I’m Warren Oberholser. I’m a realtor in the East Bay Tri-Valley area in Northern California. My goal is to help both buyers and sellers get maximum results for one of their biggest investments, their home.
Residential real estate is now starting to transition back to a more normal pattern. This is a great opportunity to find California Investment Properties!
Yes, there are still some extensions on the moratoriums for loan forbearance and evictions. These extensions may continue until the end of the year but clearly, they will be over. And with the recent rise in COVID cases due to the Delta Variant has implemented, again, stringent social distancing guidelines, such as wearing masks indoors, when at stores, etc. However, I don’t see the CDC and the government shutting everything down as they did last year.
The reason why?
- 1 We have the vaccine.
- 2 People are already familiar with the social distancing drill.
- 3 Medical doctors and nurses with research and experience are becoming more effective in treating the virus.
- 4 Businesses have shown that employees now can work from home, both effectively and efficiently. In fact, in my last BLOG/video on California Real Estate Market, I discussed the stats from the California Association of Realtors on the typical buyer, which is a person who works from home.
So I’ll continue to monitor and update you on the status of loan forbearance and eviction moratoriums
However, as real estate starts to transition back to a more normal playing field, we need to be prepared on when and where to look for California investment properties deals at wholesale pricing.
What’s the importance of purchasing ‘California investment properties’ at wholesale versus retail? Well, besides paying less, there are a few other reasons.
- One- If you’re planning to flip the property, then you’ll want to purchase it at a low enough price, so after repairs and selling costs which includes your realtor fees, you’ll want to clear or make a 10% profit.
- Two-For rental property your cap rate needs to be favorable enough to justify the purchase of the property.
What’s a cap or capitalization rate? This is a formula dividing a property’s net operating income by the current market value. To understand more on the, please read CAP rate explained.
Now, where can you find ‘California investment properties‘ at wholesale pricing? Well, there are a few areas.
- 1 Auction. Now this includes the trustee sale at the court steps.
- 2 Short sales.
- 3 REOs is known as bank-owned properties.
- 4 Probate sales.
- 5 Buying preforeclosure properties directly from the homeowner.
Each one is similar but at the same time, completely different. Let’s look at the similarities first.
- Short sale
These are typically distressed properties. This means they usually have deferred maintenance. If the past or current homeowners, as with short sales and pre-foreclosure cannot pay their mortgage, taxes, HOA, etc, they usually will not be able to pay for any maintenance on the home. This could lead to the need for repairs. The other similarity, these properties have the potential, even in this market, to be purchased below retail pricing. These are usually the first to look for when shopping for ‘California investment properties.’
So what’s the difference? Well, there’s a lot.
Preforeclosure (California Investment Properties)
California Investment PropertiesPreforeclosure is a property that is at the beginning of the foreclosure process. Typically, these are homeowners who are 90 days late on their mortgage payment and have been sent a note of default from their lender.
Short Sale (California Investment Properties)
A short sale is basically when a property sells for less than what the outstanding loan balance is. It can be just one loan or a combination of debt between the primary and second mortgage or mortgages. In order for a lender to approve a short sale, there’s a series of items that need to be handled up front.
In my next investment BLOG/video, I’ll go into great detail on this subject. Just know that it can take anywhere from three to six months for loan approval for a short sale. And I’ve seen in some cases, short sales take up to a year and longer to close.
Auction and Trustee Sales (California Investment Properties)
This is the part of the foreclosure process a bank takes when it is foreclosing on a home. Foreclosure is a legal process. To understand more about foreclosure, visit The Six Phases of Foreclosure by Investopedia.
REO (California Investment Properties)
REO stands for ‘real estate owned’ and is commonly known as banked owned real estate. This is when a bank does foreclose on a property and lists the property for sale on the Multiple Listing Service or website. Now for REO, there is no approval waiting period like there is with a short sale or probate court.
Probate (California Investment Properties)
Probate is a court procedure that comes into play when somebody passes away to validate and carry out the deceased’s will. Part of the probate process is the general distribution of the deceased’s estate. Now, this would include personal and real estate property. It can take up to six months for the court to allow the beneficiaries the right to sell their inherited home.
For more information on probate, please see my blog/video I created on Probate. I explained the complete process from the court to sell the property.
The reason Probate can be an excellent source for investment real estate is these properties tend to be in original condition. In other words, they lack upgrades or remodels, and also like a short sale, auction, and REO properties, they can have deferred maintenance. Most beneficiaries and these are the people who inherit the property, just want to sell the property in its current as-is state.
This covers the five types of investment properties for 2021
Now here’s your first real estate investment assignment.
Open up a browser window and type in foreclosure.com. This is my affiliate link, if you do choose to sign up (using my link) I do get a tiny portion which I greatly appreciate it and it does help support my channel. However, you do not need to be a member of foreclosure.com to complete your first real estate investment assignment.
Presently I’m not signed in to my account. On the main page, scroll down to the map of the United States. You can click on any state you’re interested in looking at for investment properties. For this BLOG/video, I’m going to click on California and pick Los Angeles. In the categories foreclosure, you can see all the available properties. Go to any area that you are interested in investing in and see how many properties are available.
I’m now signed into my website. You can see there’s a lot more available information, including market value and rental rates. I’m not sure how accurate it is but it gives you a quick analysis of investment potential. Also, pictures, property description, and being this property’s on the market as an REO, you can reach out to the listing agent for an update on the property status. I changed cities to San Diego in the categories preforeclosure.
Now I always begin in this search for what is owed on the property and I compare that to what the retail estimate is. Keep in mind, this number may not reflect all of that is owed on the property, including a second mortgage, taxes, etc. This states that there’s a Trustee sale set for September 10. Here we are in Sacramento for an auction property. Note the price compared to the market value. The minimum bid is $269,100.
The last area we’re going to look at is short sales and the city is Yorba Linda. Note the difference between what is owed on the property compared to what the retail price estimate is. Below is the listing agent’s name and contact information.
Your assignment is, get as much information on properties that have potential opportunities for investment in the city or cities you’re considering investing in.
Foreclosure.com is a great tool for locating preforeclosure and auction properties. It’s not the only website or search tool I use. For short sales and REO properties, I typically use the Multiple Listing Service website or MLS. For Probate, I’ll use the court records when available. We have just scratched the surface on how to locate investment properties. In my next BLOG/video on this series, I will go into more detail on short sales and where you can look for them.
I hope you enjoyed this article. Please let me know if you have any questions. Warren
Hello…I work with both buyers and sellers in the Tri-Valley area of Northern California. The Tri-Valley is comprised of 6 cities: Pleasanton, Livermore, Dublin, San Ramon, Danville, and Alamo. To better understand what each city has to offer, I have created a Pros and Cons video and BLOG for each – (Pros & Cons for Pleasanton, Pros & Cons for Livermore, Pros & Cons for Dublin, Pros & Cons for San Ramon, Pros & Cons for Danville and Pros & Cons for Alamo). If you are thinking about purchasing or selling a home, please reach out to me by text, phone, or email. If it is convenient, I can schedule a Zoom chat so we can discuss your home goals. Wishing you all the best on your home journey. Cheers!
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