With all the foreclosures occurring, now is a most advantageous time to buy and invest in houses. But how do you know what is a good deal and what is not. Well if you want to rehab, wholesale, landlord or bird dog these guidelines and specifics will help you.

Lets start with what is actually a good deal and what is not! To do this we are going to need some basics. Start by calling, or emailing if you are shy, 5-8 Realtors and find out what the average selling price is in your area in the past 3-6 months.

Buy doing this, it will give you whats called a landmark or baseline to work from.  Let me explain, because some of your Realtors may not understand. They might ask, well for what area? Or what price range? No, no, no, like Amy Winehouse says. Ask them to give you an average of ALL, EVERYONE of the houses sold. To get this, you take all the houses that have sold in the metro area and average them out. Usually its listed in your newspaper too. The newspaper can be about 80% accurate with their numbers, just an FYI.

Once you get this price, say the average selling price is $250,000, divide that by 2 which equals $125,000. These are the houses you want to look for, period, IF you are gonna be a bird-dog, wholesaler, or rehabber.

Now the goal is to buy the foreclosure or preforclosure.  Take $125,000 divided by 2 again and buy your investment deal at $75,000. This is why: more folks can afford a $125,000 house than a $250,000 house, so you have more buyers. This makes your house deal a much higher demand than a $300,000 house. To put it another way, more folks can afford to shop at WalMart than can afford to shop at Nordstroms or Macy’s department stores.

As one gets more experience with their rehabbing costs, areas to buy in, what to buy and the greater picture you can pay more. You can take that $250,000 number and only take 25% off that price equalling $187,500. Then cut that $187,500 in half to $93,750 and buy at that price.

Be sure to assess your rehab costs, this is important as well. And there are other criteria to consider, certainly, but in this context that should help. But generally you can’t go wrong with these numbers.

Tags: , , , , , ,