Before you read any further make a note that this formula does not work in every area. You must also do some research to determine if it is right for you. This simple formula for real estate success has been used by many investors in small towns and larger cities. You will need to take the information and apply it to your investment scenarios to see if the formula is one you can use.

The first thing to do is locate the list of foreclosed homes in your area. This list is growing all the time across the country. The federal government has a listing of every foreclosed property they have on the books. You will need to go to the Housing and Urban Development web site to find the properties listed in your area.

The second thing you should do is find properties listed for under a certain amount of money. In some areas this figure is as low as $5,000. Your area may be different due to the cost of living or other factors. In the area we are using for our example, this figure is actually reasonable. The objective is to find the lowest priced property and offer an even lower purchase price. This can and is being done all across the country.

For example, in Ohio, you can find hundreds of properties which have been repossessed and are on the market for as low as $1,900. By offering to purchase the property at $1,000 you can realize a profit in a very short time. To do this you must also determine how long the property has been on the market. Many times the newer listings are offered at fair market value or appraised value. This is not always a great deal. With a simple formula for real estate success, you are looking for properties which have been on the market for eight months or longer. Many times it is the area which causes an investor to shy away from these properties. The area where the home is located does not affect this formula.

When you do locate a likely property the first offer you make is for $500. This price is the lowest you can offer for a repossessed property listed with the HUD office. The reason is because the real estate agent handling the sale must be paid. To answer your question, yes, there have been times when this offer has been accepted. To be honest, this is rare, but it has been done. If your offer is rejected, wait at least a month and make another offer. This time the offer should be $1,000. Many times the second offer is the one accepted. This is especially true for long listings with no other interested parties. The highest offer you want to make is $2,500. There is a reason for this.

When you are able to purchase a property for this low amount of money, the next thing to do is offer it to the open market as a lease option or land contract. You will be asking the buyer for a down payment equal to or greater than what you paid for the property. With the new buyer responsible for taxes and insurance, the money generated by the note you have is pure profit.

This simple formula for real estate success has worked many times for seasoned as well as beginner investors. It has allowed the investor to generate a positive cash flow from the property. There is usually a fair amount of equity built up in the home because of the low purchase price. The only thing the investor needs to worry about is finding a qualified buyer. This can be done by doing a credit check on the buyer. Once you have determined the buyer can make the payments, it is simply a matter of being paid every month. You can use this simple formula for real estate success over and over again to generate a nice monthly income.