Is a foreclosure home a good real estate investment? The answer is yes; as long as investors engage in due diligence. There are many considerations when it comes to purchasing foreclosure homes. Investors should create a list of pros and cons to determine if the house will provide a good return on investment. Market analysis reports should be reviewed to compare real estate sales in the area.
Rarely will investors find a foreclosure home in perfect condition. When Borrowers become delinquent on mortgage payments; they generally do not have the funds to maintain the house. It's not uncommon for the evicted homeowner to take out their frustration on the house. Oftentimes, walls are knocked down, carpets ripped up, appliances removed, or tubs and toilets smashed to bits.
Oftentimes, foreclosed homes are subject to vandalism. Once banks repossess the house, it can sit vacant for years. No one watches over the property on a regular basis, which makes it a magnet for random acts of crime.
This is not to say investors can't find a foreclosure home in good shape. Many of the homes sold at auctions ended up there because the owner died and their estate couldn't maintain the mortgage payments. Others belonged to hardworking Americans who fell upon financial hardships.
More often than not, real estate investors will need to spend money on repairs before they can resell it or rent it. The exception to this rule is when investors engage in wholesaling for quick cash. This is an option which allows investors to purchase a home significantly under market value and resell it to a rehabber or another investor.
Experts recommend working with a Realtor who specializes in foreclosures and bank owned property; particularly when orchestrating the first deal. Utilize their expertise and learn negotiation skills to obtain a lower purchase price or reduce closing costs.
Foreclosure specialists can reduce the amount of time spent looking for viable foreclosure properties. By providing them with a list of home characteristics, specialists can locate distressed properties in areas where investors wish to invest in rental or house flipping real estate.
Once investors are ready to purchase a foreclosure home, they should obtain pre-qualified financing. Not only will this let the investor know what he qualifies for, it also shows the seller the investor is serious about purchasing the property.
These are just a few ideas for investing in foreclosure homes. Other investment options include short sales, "Subject To", pre-foreclosure and probate real estate. Our foreclosure real estate article library contains a wealth of information on a wide range of investing and personal money management topics. We invite you to spend time reviewing these articles and hope they provide the answers you are seeking.
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