The key to buying real estate at a discount is very simple - you look for deals that most people don't know and you never pay market price. You just need to have a strong belief in your numbers and hold fast and not be swayed with your emotions. The mathematics part of investing is very easy - the challenging part is having the persistence and courage in not giving up until you finally get your first deal...after that your momentum will carry you to get more deals.
Now usually most people will look at the MLS listings to find homes for sale - this is a good start to get you comfortable in talking with agents and getting experience in looking at properties. But where I get most of my deals are at the County Recorder's Office. I live in California and I go to the Recorder's Office and look for Notice of Defaults (NOD) - these are notices placed by the lender when an owner has been late with their mortgage payments. The lender has started what is called a Foreclosure process - I gather all the recent NODs (depending on how big your county is, I normally work on 40 to 60 properties for the week). The NODs will have the current owner and/or the person(s) who took out the mortgage and the address of the property. So bring your laptop (or notepad and pen) and copy the information down. If you have never been to the Recorder's Office and checked on NODs, don't be afraid to ask for help with one of the Recorder Clerks - "Hello, can you assist me in locating your Notice of Defaults on your system?"
Once you have made up your list of properties, pay close attention to the proximity of the homes. I strongly advise those who are just beginning to stick close to the city you live in - some counties like LA County, Orange County will have many properties to look at and you would be overwhelmed trying to get every single home. So in the beginning, stay close to the city you are living in and once you have networked with the agents, banks, contractors etc, then begin to expand to the outlying cities.
I'll go over what to do next on the following post...