Home Improvement Contractor - Licensed Contractors
How would a general contractor get involved with banks and their foreclosures?
I am an assistant to a general contractor and he has put me in charge of finding new business. So my question is if we wanted to get involved with renovating or remodeling foreclosed homes that the banks own, how would we go about doing that?
Public Comments
- I'd start with smaller, local banks but in any case the first step is to call and ask the name of the person who handles their REO (Real Estate Owned). Then call back and make an appointment to meet with that person. You will probably find they usually sell the properties "as is" to an investor or buyer who does the fixing but perhaps that is not always the case. If your firm has the capital to purchase the homes (with the bank providing 80% financing on at least a short-term basis), you can make this work that direction, too. The key is to establish a strong relationship with the bank. The first place I'd suggest is where your firm banks now. They already know the company.
- call banks "REO" (Real Estate Owned) dept chances are banks will not be interested in putting any more money into the properties - the y want to sell them as quickly as possible
- Most banks sell houses they have as Real Estate Owned (REO) as is and do nothing to repair them at all. You might invest in several books on real estate investing, buying and selling real estate. There are several books that you might find interesting. Look for these books at your favorite book store. For the ones that are in need of a lot of repair they normally sell to investors at a deep discount, where they fix them up for sale. You and your boss might consider this, buying the banks worst problem properties for a deep discount. After buying them fix them up for resale. You will run into a little resistance from the real estate agent that has been assigned to sell the property. They might not want to submit your low ball offers. Find away around this person, they are not living in the real world. You are not looking for properties that need cosmetic repair,you are looking for properties that have major damage where a new owner would not want to repair. Yo are also looking for properties that have been sitting on the market for a long long time. The best thing to do is enter the house 1. Make a list of all that is damaged and in need of repair. 2. Find out the market value of the house 3. Come up with a cost to make the repairs to the house Once you have done this make a low ball offer on the house with first right of refusal. If the lender turn down your offer stick with your offer, ask for a counter offer. If you still feel as if the property is too much pass on it and move on to the next project. Now the bank is not made up of idiots so make your low ball offer with intelligent repair cost, why the bank would benefit from your low ball offer. You will need to have a small amount of capital for this type of investment, but over the long run you will be better off than trying to fix up properties for the banks. They will always low ball your estimate, causing you to lose time and effort attempting to get business from them. Do this several times with several banks, pretty soon you will have all the work you can get. There are other things you will need to know 1. How to get rid of the properties you repair for sale. 2. Getting finance for your buyers 3. Carrying some of the sales price to get rid of your properties so as not to have a large inventory on hand and nothing is selling. 4. Be creative with your buyers so you can get rid of the house and at least have an income stream coming in. Watch out for selling everything, you have an Uncle that will be holding his hand out so protect yourself so you will not become a tax payer with no income. A few rentals would solve a few of these tax problems. For tax and legal matters you should consult your tax consultant and attorney. I hope this has been of some benefit to you, good luck. "FIGHT ON"
