How to Find Cheap Houses for Sale

In a market that seems complicated and out of reach at first glance, this guide can show you how to find and buy cheap houses that you can make a profit on. Remember, not all cheap homes are created equal. So, without further ado, let’s get down to the essentials of finding cheap investment properties with fantastic value and not just money pits.

Understand the Real Estate Market to Learn How to Find Cheaper Homes

Grasping Market Dynamics

Knowing the ins and outs of the real estate market is the first step to making informed decisions. The market can be tricky to understand because so many things affect it, such as the economy, loan rates, and supply and demand in the area. If you are looking for trustworthy information about real estate market trends, you can find it in reputable sources like the NAR (National Association of Realtors) and the real estate sections of financial news outlets like Bloomberg and The Wall Street Journal.

Note: You can learn more about investing trends in our report, Residential Real Estate Investing Trends for 2024. We also have a section of our blog dedicated to market updates that you may find helpful.

Identifying Opportunities

Wise investors, even novice investors, know that mastering the art of determining what makes a property “cheap” goes beyond its sticker price. This may be because of its condition, location, or the seller’s desire to sell quickly. Using real estate search engines like Zillow, Redfin, or Realtor.com, you can refine your property search results by price range, neighborhood, and property type. This will ensure that you are always aware of opportunities that present themselves.

Local Market Research

Get to know the housing market in the area you’re interested in inside and out. If you want to learn how the neighborhood is doing as a real estate investor, you need to go to community events and local investor seminars. City-Data and the United States Census Bureau are two resources that can help you get a complete picture of prospective markets in the US by providing demographic, economic, and social data for almost every town and city. Being able to see statistics like the total number of houses for sale in a given area, and what price the homes are selling for can be invaluable to your real estate investment strategy.

Note: You can learn more about finding investment properties for sale, the different investment strategies you can use to diversify your portfolio, and the different types of homes you could build your investment strategy around in our in-depth guide, “Selecting Your Investment: A Guide to Finding the Best Investment Properties for Your Needs.“

Research Is Key in Learning How to Find Cheap Houses

Conduct Property Analysis

There is a story behind every property, and knowing that story is important for making smart choices. Your first step should be to research the area around the property to get a feel for crime rates, school districts, neighborhood quality, and nearby facilities. You can find more information on these elements on websites like NeighborhoodScout and GreatSchools.

Understanding Valuation and ROI

Another skill you’ll need to be a successful investor is mastering the art of determining a property’s prospective ROI. For this, you’ll need a firm grasp of ideas like ATVs, rental yields, and rehab expenses. Calculators like BiggerPockets’ Rental Property Calculator can help you estimate these values so you can make decisions based on the data.

Legal and Zoning Considerations

To fully understand the property’s potential, it is vital to become acquainted with your area’s zoning rules and restrictions. The local planning office, whether for the city or the county, is a good place to begin gathering this information. In addition, before you think about renting out the house, you should familiarize yourself with the legalities of landlord-tenant rules. Many state websites offer helpful tools and guides regarding these laws.

Network With Others to Find Local Property Deals

Building Relationships with Real Estate Professionals

Forming connections with other investors, real estate agents, brokers, builders, and other investors can give you a lot of useful information and opportunities. Get your feet wet by becoming a member of a local real estate investment club and joining a real estate investing community on social media sites like Facebook and LinkedIn. Many homes for sale don’t make it to the MLS, but are shared within networks and groups in the real estate community. This goes for both single family homes and multifamily properties.

Note: If you want to learn from a community of New Western investors, we have a number of Facebook groups you can join!

Leveraging Professional Associations

Involve yourself with relevant professional groups, such as the NREIA for investors and the NAR for real estate agents. By participating in the networking events, educational programs, and resources these organizations offer, you can connect with seasoned industry experts.

Direct Outreach and Partnerships

Something to think about is making direct contact with property owners. By using tools like PropStream or websites run by local tax assessors, you can find contact information for homeowners who might be interested in selling their property. Additionally, don’t forget that forming partnerships with experienced investors can provide learning possibilities and help split the financial risk.

Learning more about these places gives you the information and tools you need to find and buy cheap houses. Always keep in mind that the key to being successful in your foray into real estate investing is a combination of making well-informed judgments, being patient, and remaining persistent.

4. Explore Government Programs for Cheaper House Deals

Investors can take advantage of below-market housing prices or favorable financing terms through several government programs that can provide you with more affordable options. Some examples are:

Navigating Government-Sponsored Opportunities

HUD Homes: The Federal Housing Administration (FHA) insured properties that the U.S. Department of Housing and Urban Development (HUD) then foreclosed on and sold at reduced prices. Visit the official HUD HomeStore website for listings and additional information.
VA Foreclosures: For veterans and military families, the Department of Veterans Affairs sells foreclosed homes on favorable terms. Check the VA’s official website for a list of available properties.
USDA Rural Development Housing: Aimed at rural property buyers, this program offers loans and grants for purchasing, renovating, or building homes in rural areas. While you can’t use this program to buy an investment property outright, you can buy a multi-family property, but we strongly recommend talking to an expert first.

Tips for Successful Applications

Research Thoroughly: Each program has its own eligibility requirements and application process. Ensure you meet the criteria before applying.
Consult Experts: Consider consulting with a real estate agent or attorney who has experience with government programs. They can provide valuable guidance and increase your chances of a successful application.
Stay Organized: Keep track of deadlines, documentation, and follow-up requirements. Government programs often involve a lot of paperwork and strict timelines.

5. How to Find Cheap Houses Through Foreclosures and Auctions

You can find great deals on houses at public auctions and foreclosures, but there are a lot of obstacles and dangers involved. These aren’t properties for sale with a list price as you would normally find them, and can come with all sorts of surprises.

Finding the Right Foreclosure and Auction Deals

Foreclosure Listings: Websites like Foreclosure.com, Auction.com, and even some county sheriff’s websites list upcoming foreclosure sales. Additionally, you can search for bank-owned properties on a bank’s website directly.
Auction Houses: Some companies specialize in auctioning off real estate, including foreclosed homes. Research local real estate auction houses and their schedules.

Strategies for Success

Due Diligence: Research the property as much as possible before the auction. This includes understanding any liens, checking property tax records, the condition of the property, and its market value.
Understand the Rules: Each auction has its own set of rules and requirements, including payment terms, bidding processes, and property access. Familiarize yourself with these rules beforehand.
Set a Budget: It’s easy to get caught up in the moment during an auction. Set a strict budget for yourself and stick to it to avoid overpaying.

6. How to Find Cheap Houses Using Online Resources

You can find a plethora of real estate deals on the internet. Here’s how to take advantage of the power of the internet:

Leveraging Digital Platforms for Property Hunting

Real Estate Listing Websites: Platforms like Zillow, Realtor.com, and Trulia offer comprehensive listings that you can filter by price, location, and property type. They also provide valuable market data and trends.
Direct Seller Listings: Some property owners choose to sell their homes directly without using a real estate agent. Websites like Craigslist and Facebook Marketplace can be good sources for these types of listings.
Real Estate Investor Forums: Joining online communities such as BiggerPockets or the Real Estate Investors Association can provide access to off-market and wholesale deals shared by other investors.

Maximizing Online Search Efficiency

Set Up Alerts: Most real estate websites allow you to set up alerts for new listings that match your criteria. This ensures you’re one of the first to know when a potential deal hits the market.
Use Advanced Search Filters: Make use of the advanced search features to narrow down your options to those that best meet your investment criteria.
Verify information: Always cross-reference property information across multiple sources. Listings can sometimes be outdated or incorrect.

7. How to Get the House Cheaper Using the Art of Negotiation

Negotiating well isn’t just about getting the price lowered; it’s also about making things better for both sides. Negotiating the price is typically the most crucial aspect of a real estate transaction, but some other conditions and nuances are just as important. That said, here are some proven methods that have been shown to work:

Mastering Negotiation Tactics

Know Your Seller: Understanding the seller’s motivation can give you leverage. Are they looking to sell quickly? Do they have an emotional attachment to the property? Use this knowledge to tailor your approach.
Start Low, But Be Reasonable: Making an offer that’s too low might offend the seller and close off negotiations. Start below your maximum willing price, but keep it within a reasonable range.
Highlight Your Strengths as a Buyer: Whether it’s your ability to close quickly, pay in cash, or waive certain contingencies, make sure the seller knows what makes you a good choice.
Be Prepared to Walk Away: Sometimes the best negotiation tactic is being willing to walk away. This can signal to the seller that you’re serious about your offer terms.

Resources for Enhancing Your Negotiation Skills

Books and Courses: Consider investing in books or courses on negotiation. “Never Split the Difference” by Chris Voss and Tahl Raz is highly recommended, as is “The Book On Negotiating Real Estate” by J. Scott, Mark Ferguson, and Carol Scott, for industry-specific insights.
Real Estate Negotiation Experts: Some real estate professionals specialize in negotiation and host webinars, workshops, and training sessions. Here is another opportunity to use search engines to find events like these near you.

8. How to Finance Your Purchase When You Find a Cheap House to Buy

Explore Your Options

Conventional Mortgages: While typically requiring a 20% down payment, some lenders offer programs with lower down payment requirements for investors.
FHA Loans: The Federal Housing Administration offers loans with as little as 3.5% down, but these are generally for owner-occupied properties.
Hard Money Loans: These short-term loans from private investors or companies can be useful for properties that need rehabilitation but come with higher interest rates.
Seller Financing: In some cases, sellers may be willing to finance the purchase themselves, often resulting in more flexible terms.

Navigating the Financing Process

Pre-approval: Getting pre-approved for a loan gives you a clear idea of your budget and strengthens your negotiating position.
Comparison Shopping: Don’t settle for the first loan offer you receive. Compare rates and terms from multiple lenders.
Understanding the Costs: Be aware of all the costs involved, including interest rates, fees, and any penalties for early repayment.

Note: You can learn more about all of your financing options, qualifications, terms, and the pros and cons of each in our in-depth guide: Financing Your Investment: What Are the Best Ways to Finance Your Investment Property? Learn From the Experts

9. A Home Inspection Is a Must When Buying Properties Below Market Value

When you’re buying a house, a home inspection is very important because it tells you about the property’s problems that might affect its value and safety.

Conducting Thorough Inspections

Choosing the Right Inspector: Look for certified professionals with experience in inspecting homes in your target area. Organizations like the American Society of Home Inspectors (ASHI) can be a resource for finding qualified inspectors.
Understanding the Report: A home inspection report can be lengthy and detailed. Make sure you understand the findings and ask the inspector to clarify any issues you’re concerned about.
Utilizing the Report in Negotiations: The inspection’s significant findings can serve as leverage in negotiations. You can ask for repairs, a price reduction, or even cancel the offer if the problems are too severe.

Leveraging the Inspection for Long-Term Benefit

Budgeting for Repairs: Use the inspection report to budget for immediate and future repairs. This will help you assess the true cost of your investment.
Planning for Upgrades: The inspection can also identify potential upgrades that could increase the property’s value, guiding your investment strategy.

Learning how to negotiate, knowing your financing choices, and knowing how important a full home inspection is will help you get through the complicated process of buying cheap houses. Your investment will be solid, sustainable, and ready for expansion if you follow each of these steps, which also get you closer to becoming the owner of the property.

10. Renovation Considerations After Finding and Buying a Cheap Property

Renovating a distressed property can completely change its appearance, but doing so requires careful planning and assessment.

Evaluating the Potential for Renovation

Assessing Renovation Needs: Conduct a thorough assessment of the property to determine what renovations are necessary. Consider hiring a professional contractor or inspector to identify potential issues and provide estimates.
Calculating ROI: Evaluate the return on investment for each renovation project. Focus on renovations that increase property value or rental income potential, such as kitchen and bathroom updates, roofing, and energy-efficient upgrades.
Budgeting and Financing: Create a detailed budget for your renovation projects, including a contingency fund for unexpected expenses. Explore financing options specifically for renovations, such as FHA 203(k) loans or home equity lines of credit (HELOC).

Resources and Tools for Renovation Planning

Software and Apps: Utilize renovation planning software and apps to visualize changes and manage budgets. Tools like Home Improvement Calcs (IOS only) can help track renovation projects and expenses. Other useful software and apps include:
- Angi – Available on: IOS, Android
- Magic Plan – Available on: IOS, Android
- Remodeling Calculator
- Realtor.com Home Renovation Calculator

Contractor Networks: Leverage networks like HomeAdvisor, Angi, and Thumbtack to find reputable contractors. Ensure they are licensed, insured, and have good reviews.

11. Must-Know Tidbits About Closing On the Property

Those who want to be successful as property investors should carefully plan repairs, learn and practice the closing process, and be aware of common pitfalls.

With these tips in mind, you’ll be able to make better decisions and keep your investment safe from any problems that might come up. This will make sure that your real estate business is successful and lasts a long time.

Underestimating Costs: One of the biggest mistakes is underestimating the total cost of buying and renovating a property. Always include a buffer in your budget for unexpected expenses. These can occur at any time with any home. There will inevitably be periodic repairs that will be on top of monthly mortgage payments.
Overlooking Property Flaws: Don’t let a low price blind you to serious issues that could turn your investment into a money pit. A thorough inspection and realistic assessment of renovation needs and costs are essential.
Ignoring Legal and Zoning Issues: Failure to adhere to local laws and zoning regulations can lead to costly fines and delays. Always conduct due diligence regarding these aspects before purchasing.

Tools and Strategies for Risk Management

Education and Research: Continuously educate yourself about real estate investing. Books, podcasts, and online forums can be invaluable resources. We have an article that lists 10 of the best real estate investing books to get you started.
Professional Advice: Don’t hesitate to consult with real estate attorneys, tax advisors, and experienced investors to navigate complex situations. We also have a team that’s ready to help answer your questions; simply use our contact form!
Diversification: Consider diversifying your real estate investments across different types of properties and locations to spread risk.

Note: You can learn more about how to manage your investment properties, property management vs. self-managing, what to look for in a property manager, and more in our in-depth guide, “Managing Your Investment: The Most Comprehensive Guide to Rental Property Management for the New Investor.”

Final Thoughts on How to Find and Buy Cheap Houses

When investing in real estate, you need to do a lot of research and careful planning to develop an investment strategy that works. At first, you should focus on learning how the market works, carefully reviewing properties, and negotiating smartly. Use the tools you have access to, like government programs and online sites, and don’t forget how important it is to network! Remember, when you’re learning how to find and buy cheap houses, patience is key!

Home

>>

Blog

>>