If you take your time, talk to a lot of people, and are patient, you'll eventually find a deal that's just right for you. At this point, focus on the particulars of the deal, not the property, even though you're sure a particular building is “meant for you.” When you talk to owners, try to maintain a take-it-or-leave-it attitude. You don't want to look eager because then the owner might not come down on the price quite as much.

Bank Foreclosures

Money may be tight and finding a mortgage might require a larger down payment than in the recent past, but right now banks and mortgage companies are overloaded with foreclosed homes that they need to sell to cut their losses. You might be able to find a good deal, especially if you have a stable job with provable income, a good credit rating, and enough cash on hand to make a suitable down payment. A bank might be willing to make a deal with a good prospect. Try to get them to waive some of the closing points, the appraisal, and possibly even inspections not required by law. Perhaps you can get them to drop a percentage on the interest rate that they quote.

To find foreclosed properties, you can enlist the help of a real estate agent or two or ask a landlord whether he has heard of anything. Check the legal pages in your local general-circulation newspaper. Foreclosure sales have to be advertised to the general public. Read the for-sale ads in newspapers and local housing magazines. Look out for for-sale signs in yards.

Buying from the Owner

Landlords who want to retire from the business may give you a good deal on vacant dwellings they own that need work, especially if they don't want to spend the time or money to fix them up. Some might accept a land contract on property that they own outright because then they'll have a regular monthly income — your payments. (See page 34 for more information on the benefits of land contracts and how they work.)

Working with an Agent

If the property is sold through a real estate agent, be sure you are getting the best deal. Did the owner and agent inflate the asking price? Find out what other duplexes in the neighborhood are selling for. If those prices are much lower and the owner you're talking to won't come down, find another duplex that has a more realistic price.

Handyman Specials

If you get a handyman special (also known as a fixer-upper), figure out what you'll need to do the work and how long it will take you, and then shop around for best prices for materials and supplies. If you plan to hire skilled workers, such as a plumber, an electrician, or a carpenter, get at least three quotes from licensed professionals. If all these costs plus the asking price add up to less than the overall value of similar properties in the area that don't need as much work, you've found yourself a good deal.

If you are unable to do the work yourself, it would be better to buy property that needs only minimal repairs. The added bonus for buying something that only needs some cleaning up and painting is that you can get a tenant more quickly and then have immediate help paying for the mortgage, taxes, and monthly bills.

Fire-Damaged Property

Sometimes a building that's had a fire can be a good deal for a person who is handy around the house. The owners have collected insurance money and if they don't want to bother with fixing up the house, they might be willing to sell it for less so they can just move on and get a new house. You can always ask the owner. But before you do, make sure that you can handle the repairs and that the price is low enough to make it worth the time and money you'll have to put into fixing it up.

If you don't have the skills or time to repair major structural damage or install the new furnace, roof, or siding yourself, do you have money available to hire skilled workers? That can be expensive if you're on a tight budget.

Auctions

Auctions also must be advertised in a large-circulation newspaper or a local legal publication. They are generally held at the county courthouse or office building. The notice will state a minimum price at which bidding will start, based on the dollars owed for unpaid taxes and other accumulated expenses. The property is then sold as-is to the highest bidder, who generally has to pay for the property with cash or a cashier's check. (The rules vary in each state or county.)

Estates

You can often get great deals on property that has to be liquidated quickly, such as when a couple gets a divorce and wants to divide assets as quickly as possible. Sometimes heirs to an estate want their share of the property right away and ask the executor to sell it immediately. Write to people who own or are handling an estate and say you're interested in helping them sell the property. You might be surprised at the interest they show. When you purchase estate property, you pay any taxes owed plus interest, penalties, legal fees, court and title costs, and any other fees that have accumulated. Sometimes the deceased party accumulated state liens for unpaid taxes, so be sure to take this into account.

Rural and Farm Communities

Look beyond the city and suburbs for property. Property taxes in small towns and rural areas are usually lower and property is not as expensive as what you'll find in or near town. Some people want to live “in the country” and are willing to commute to work. But make sure you find a community that is viable enough to appeal to commuters. If Main Street has too many boarded-up stores and too few pedestrians, it may not be a good idea to move into that community.

HUD Sales

The Department of Housing and Urban Development (HUD) will sell a house if the owner has defaulted on a loan through an FHA (Federal Housing Authority)-approved bank. When that happens, the government pays off the bank and the property reverts back to the government agency. To sell these properties, HUD sets a minimum price and the house goes to the highest bidder.

HUD has its own rules for such things as closing costs, down payments, transfer taxes and recording fees, and using a real estate agent to handle everything. Usually the property offered will have been vacant for some time and needs a lot of work. If you can do the work yourself and meet the qualifications, you can often get a very good deal this way.