Real estate investors realize the tax advantages of rental properties and buy foreclosed homes for under market value, rehab the house, and then rent the house to create a positive cash flow source. Foreclosed houses are houses that are owned by the lender, usually the bank, because the previous owner defaulted on his loan. Foreclosed houses are favorites of real property investors, and are usually offered for sale at auctions.
The advantage of purchasing a foreclosed house is that the house is usually sold at about fifty percent less than the market value of the land. The bank is eager to sell the house at a bargain price because the bank does not want to incur extra financial losses. Banks are in the business of lending money not in selling houses.
The person who masters the land auction bidding process will have access to many great land deals and will be able to build his land ownership. The smart bidder knows that he has to set a limit for each home he bids on and never go over the limit. The smart investor bids with his mind and not his emotions.
The veteran investor was not always a veteran land auction bidder. In many cases he first sat in on a few auctions without bidding to understand and learn the bidding process before participating in the process. The veteran investor probably went to an auction with a veteran of the bidding process before he placed his first bid, and asked a lot of questions before bidding.
Inspect the house before bidding on it. All auctions send out a list of houses that will be put up for bid, weeks in advance. Take that chance to see the houses in person and find out if there are major repairs needed.
Many people would rather not invest in real estate because they say that they have no contracting, plumbing, or electrical skills. But, most real estate investors do not perform their own rehab work, but rather hire contractors, plumbers, and electricians, who take care of all the repairs. This is a good time to hire these building professionals because work is scarce and many contractors are willing to reduce their rates.
The real estate investor knows all there is to know about tax advantages of rental properties because he has built his business off foreclosed houses he has repaired and rented. Foreclosures are for sale at bargain prices at land auctions. This is a great time to become an expert at land auction bidding.
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