For most small or beginning real estate investors, the purchase of a rental home is the only option. Investors that don’t have hundreds of thousands of dollars to invest, are likely going to start with a rental property or two until their capital accumulates to buy something larger.

Many new investors look to buy a foreclosed home based on the recommendation of many real estate gurus. Without knowing what they are getting into it is easy to overpay for a property and not reap the full rewards of being a property owner.

The likelihood of overpaying is even greater. The WSJ.com is reporting that Bidding Wars Are Emerging on Foreclosures in certain areas of the country, including California.

Falling home prices are starting to ignite bidding wars in a few parts of the U.S. as first-time buyers compete with investors for the same foreclosed properties.

In most of the nation, the supply of unsold homes continues to swamp demand. Home prices in many markets continue to fall, and foreclosures, which slowed in late 2008 as mortgage companies delayed taking action against delinquent borrowers, are picking up again.

But real-estate brokers say multiple offers on certain homes have recently become more common in parts of California and Arizona and the Washington, D.C., and Minneapolis-St. Paul metropolitan areas.

Strict Buying Criteria

It is important to establish buying criteria in advance of the purchase to meet your investment goals.

The easiest way to hit nothing, is to aim at it.

Buying criteria serve as the the yellow and white stripe along the road. As long as the yellow line is on the left and the white is on your right, you are going the right direction.

The same is true with buying guidlines for real estate investors. First, you need to know which way you are going. Second, you need the guidelines in place to keep you on track.

Setting price, income, and expense goals in advance will protect the early investor from venturing to far from their goals and jeopardizing their retirement plans.

If you would like help establishing your buying criteria, feel free to call Maclennan Investment Group at (925) 324-8626.