There tends to be a herd mentality when it comes to real estate investing; once people start entering the market, everybody wants in.  For the trailblazers, chances are there will be some very sweet grass ahead of the herd.
 
In our current market there are two types of situations that really get investors excited: foreclosures (REO) and short sales. Let’s take a brief look at these types of distressed sales and determine which will get you the best deal.
 
Your typical short sale can take up to six months to navigate and generally offers a 10-12% discount off fair market value (FMV). In addition to the lengthy turnaround time, once under contract there is no guarantee the bank will actually approve the short sale.
 
With REO, the transaction usually happens more quickly and discounts can be as high as 15% off FMV.  Additionally, banks often follow a set price reduction schedule lowering the list price 3% every 27 days until they receive an offer.  If you can time the reductions chances are you’re going to get an even better deal.
 
Historically real estate has proven to be a good hedge against inflation, and although the stock market has been a good performer over the last two years, serious investors know the real key to long-term success is diversity.
 
If you are considering including real estate as part of your portfolio, try to purchase your investment property before things heat up, inventory dwindles and the herd tramples the really sweet grass.
 
For information on evaluating prospective income producing properties and other real estate related investments please contact me at timmk@vail.net or (970) 471-3472.