Invest In A Home Without Seeing It

Have you ever contemplated purchasing a home without stepping foot through the front door? Your first assumption may be that this is a irresponsible strategy to take with investing in real estate. You may be interested to learn that many investors in the Houston real estate market are taking this very approach; and succeeding.

Investors Only

I would never advise for anyone looking to purchase a home as their homestead to attempt this technique. This strategy should be only for investors that are serious about investing in residential real estate. My definition of a true investor is someone who has 20% down to put down on their next investment property, and fully pre-approved with a mortgage loan.

How It Works

It is first adviseable to have a trusted real estate professional on your team to scope the available market and pinpoint your potential investment properties. Once you have a property in your sights, structure your offer to allow for a contingency to cancel the contract.

It is important to accept that you may not step foot prior to a contract acceptance on your investment property. In hot investment markets, if you make it a point to view each and every investment property prior to submitting an offer, you will expend a majority of your time speculating, and even less time submitting offers. Structure your offer to reflect a conservative estimate in repairs to completely renovate a home, or assume an average amount (this will highly depend on your market), and submit your offer if you are able to submit with a contingency.

Obtaining a contingency in your transaction may be hard to achieve, but these deals are in today's real estate market. There are a variety of situations you may encounter:

• Pre-foreclosure: If the property you have discovered is in the process of being foreclosed on, you may have the opportunity to submit an offer with an "option" period that will allow you to cancel the contract during a period of time for a per day fee. This is an ideal investment property, as you will not have to adhere to the strict requirements of a bank owned property or a property in possession of HUD.
• Bank Owned Properties: You will need to consult with the owner of the property (a bank, in most cases) and discuss the options of a contingency. Suggest that you would be willing to pay for the option to cancel your contract. If no contingency is obtainable, move to your next property unless you are certain that this property will produce a positive return in any physical condition.
• HUD Properties: Unfortunately, these contracts are usually contingent only on the ability to obtain financing. I have personally not been able to have a successful HUD transaction with an investor, as HUD gives preference to "owner-occupants" of their properties. If you convey that you are an owner occupant, but in reality are an investor, you may be subject to hefty fines by HUD. If you have successful strategies for investing in HUD properties, I am open to all suggestions.

The ability to obtain a contingency on a foreclosure is not easily obtainable, yet then again, great investment properties are not a dime-a-dozen or else everyone would be investing in real estate. Always remember that you will have to kiss many frogs to get your prince or princess, so be sure to have your criteria as an investor formulated before even considering an investment. If the property does not meet your investment criteria, move on without an hesitation.

The information contained in this article is derivative on the Houston real estate market. It is advised that you consult with a real estate professional in your local market if you are considering investing in real estate. This investment strategy may/may not be able to be accomplished in your market.

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Steve Castaneda, Realtor, is a Houston Texas Real Estate consultant that helps investors find income producing properties. He has been assisting Houston real estate investors for over 2.5 years, and focuses on providing a detailed market analysis of each investment property to ensure that the "numbers" are understood and a logical investment decision is made.

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