Today, nearly 11 million foreclosed homes are sitting vacant across the United States. In July 2008, President Bush signed the Foreclosure Prevention Act to help homeowners stop foreclosure. However, this Act has done little to slow down the number of foreclosure filings. In fact, experts predict foreclosure rates will continue to soar until the year 2010.
Investing in foreclosed homes can yield a good return on investment if you are able and willing to wait out the housing crisis. Many foreclosed homes are distressed properties which are priced below market value because they are in need of extensive repairs or renovation. Others have simply been abandoned because the homeowner chose to walk away from their over-inflated mortgage note.
Occasionally, investors can locate foreclosed homes that are in near perfect condition. However, more often than not, foreclosure properties have been neglected for a considerable period of time. These homes usually require real estate investors to either engage in physical labor or hire outside contractors to perform rehab work and return the property to livable condition.
Investors who are new to purchasing foreclosed homes would do best to work with a private investor or realtor who specializes in foreclosed properties. By working with specialists, investors can obtain greater bargaining power and additional benefits such as reduced closing costs.
Foreclosure specialists can help investors locate homes more efficiently than if they search for them on their own. Realtors and private investors have access to hundreds of distressed properties and can help investors sort through foreclosed homes more efficiently.
Experts suggest investors obtain prequalified financing prior to purchasing foreclosure properties. Doing so will ensure you are qualified to purchased foreclosed properties when you find the right house. Prequalified buyers oftentimes have additional leverage when making offers on distressed houses.
Investors should always engage in due diligence when purchasing foreclosed homes. A thorough investigation of the area should be conducted to determine the market value of area homes, as well as anticipated property value growth.
When visiting foreclosed homes for sale, take along a pen and paper and a camera to document problems. Foreclosure houses with multiple problems provide better bargaining power than homes which require few repairs. However, this could potentially lead to a decreased return on investment unless you are able to conduct the work on your own.
Hiring contractors to engage in considerable repairs can significantly add to the final cost of the home. If the house requires $30,000 in repairs and is being sold at $30,000 under market value, it isn't a very good deal. The goal of investing in foreclosed homes is to turn a profit, not just break even.
Last, but not least, be certain to conduct research to determine if foreclosed homes have creditor or tax liens attached to them. Lien removal can be a time consuming and costly task.
Purchasing foreclosed homes is not without risk; particularly in today's recessed economy. However, if you do your homework and engage in due diligence, foreclosed properties can significantly expand the value of your real estate portfolio.
We invite you to learn more about real estate investing, foreclosure homes, bank owned real estate, and other investment opportunities in our investment article library. New articles are added on a weekly basis, so take a moment to bookmark SimonVolkov.com and visit us often.