Recycling Trash into Cash with ?Dontwanners?

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RISMEDIA, Feb. 27, 2007-Dontwanner (don't want her) is a term I often use to describe distressed properties-houses and other real estate that the owners don't want so much that that they're willing to do anything to get rid of it, including deeply discounting it. Real estate investors can score big profits on dontwanners by recycling what the owners consider burdensome trash into cash.

Every neighborhood has its share of these cash-into-trash opportunities, but finding them can be a bit challenging, especially if you don't know where to hunt for these hidden treasures. In this article, I show you how to spot the dontwanners in your neighborhood.

Cashing in on the Four D's
When treasure hunting for distressed properties, remember that either the property or the owner can be distressed. Usually it's both, but some of the best opportunities can be discovered by looking for distressed owners. Follow the four D's:

- Death
- Divorce
- Desperation (resulting from a job loss or other financial setback)
- Drunkenness

Cruising the Neighborhood for DontwannersDrive, walk or bicycle around your neighborhood in a search for dontwanners. Some of the best properties may not even be for sale, so look for the following signs and symptoms:

- Overstuffed mailbox.
- Porch littered with newspapers.
- Overgrown lawn.
- House looks vacant inside.
- Cheap For Sale or FSBO (For Sale By Owner) sign.

If you spot a dontwanner, talk to the neighbors to find out who owns the house, and then try to contact the owners to see if they want to sell the house.

Digging through the MLS Listings and Classified Ads
Check the Remarks section on MLS listings and classified ads in your local paper for the following clues that the property is a dontwanner:

- Sold As Is
- Handyman's Special
- In Need of a Little TLC
- Needs a Little Work
- Must Sell
- Needs Work
- Must Sell
- Fixer-Upper
- Must Sell
- Relocating

When looking at classifieds, smaller ads trump larger ads. Large ads indicate that the owners are willing to invest more in marketing, meaning that they expect a higher price.

Foraging for Foreclosures and Bankruptcies
With foreclosures on the rise, particularly in economically distressed areas, real estate investors can scoop up properties at a bargain. You can dip in at any stage of the foreclosure or bankruptcy stage:

- Pre-Foreclosure: Approach the homeowners with a proposal prior to the foreclosure sale.
- Foreclosure Sale: You can bid at the foreclosure sale against other investors.
- Post-Foreclosure: Buy the property from the lender's REO (Real Estate Owned) department after the foreclosure sale.
- Bankruptcy: After the foreclosure sale, the owners still retain control of the property through the redemption period (typically 3 to 12 months in most states). The owners can file for bankruptcy to buy themselves additional time. As a real estate investor, you may be able to step in at this stage to acquire the property.

If you don't know what you're doing in the foreclosure arena, don't step into the ring. Losing money in foreclosures is a lot easier than making money. Do your homework before you lay down your cash.

Probing for Probate Properties
Death often leaves behind property that ends up in probate. You can find out about probate properties in any of the following ways:

- Contact a probate attorney.
- Check for probate auction notices in local newspapers.
- Contact estate auctioneers.
- Network in the neighborhood.
- Spotting a dontwanner in your neighborhood and contacting the owners.

Discovering Deals in Divorce
Finding the real estate remains of a divorce settlement requires a moderate amount of research. Look into the following resources:

- Your local newspaper's divorce announcements.
- Divorce lawyers.
- Real estate agents.
- Church members.
- County courthouse. (Divorce decrees are public records.)

Going for Gold with Government-Seized Properties
Government authorities often take possession of a property because the previous owners paid for the property with ill-gotten gains or failed to pay their taxes. To find government-seized properties, contact the following agencies:

- State department of transportation.
- State or county drug enforcement agency.
- County sheriff's office.
- IRS at www.treas.gov/auctions/customs/realprop.html.

Buy It, Fix It, Sell It
Finding a dontwanner is only the first step. To ensure a profit, you have to buy it for the right price and terms, renovate it fast and within budget, and then sell it for a profit. This real estate investment strategy, commonly referred to as flipping houses, requires substantial know-how and labor. If you're ready to make a rewarding commitment, however, flipping houses is a great way to begin building your future fortune in real estate. -Ralph Roberts

Ralph Roberts is the author of the forthcoming book Flipping Houses For Dummies (John Wiley & Sons, November 2006), coauthored with Joe Kraynak.

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