Foreclosure houses can be a great investment for real estate investors and home buyers. Foreclosure real estate is usually sold under market value and can provide the buyer with instant equity. However, there are many factors which should be considered when purchasing or investing in distressed properties.
There is no shortage of foreclosure houses on the market. Unfortunately, many of them have sat vacant and untended for several months, or even years. It is extremely rare to find foreclosed homes in perfect condition.
When people buy foreclosure houses they generally have to spend time and money on repairs and renovations. Before investing in any house, it is important to obtain an appraisal and repair cost estimates. Determine repair costs against the equity to determine the true cost of the property. If you break even after making repairs, you might want to look for houses which require less work.
Many people are lured into purchasing foreclosure homes because they believe they can flip the property and make a substantial profit. While it is true house flipping can be quite profitable, it takes time and practice to become proficient in this type of real estate transaction.
House flipping is not nearly as easy as TV shows make it appear. In reality, house flipping is extremely stressful. It can also be extremely expensive. If you want to play this real estate game, you would be wise to become educated in all aspects of this niche.
Unless you have cash, it is a good idea to obtain pre-qualified financing. Not only will you know exactly how much you qualify for, you also have extra leverage when it comes time to make an offer. Today, pre-qualification is more important than ever. With the credit crisis, most lenders are particularly discerning of whom they will lend money.
Experts recommend working with a foreclosure specialist; particularly if you want to locate a home quickly. Considering the sheer volume of foreclosed homes, it could take you months to locate and sort through all the properties. Realtors and real estate investors can help you locate properties more efficiently.
Foreclosure homes can be purchased directly through auctions. Foreclosure auctions are oftentimes published in local newspapers. They can also be located by typing in "foreclosure auctions + the name of your city" at any search engine.
When real estate goes unsold through auctions, the property is returned to the bank. It then becomes real estate owned (REO) property. Bank foreclosures are oftentimes listed on each bank's website. Most are sold through the bank's loss mitigation department. However, some banks enlist realtors to represent the property.
Last, but not least, foreclosure homes can be purchased from private real estate investors, such as Simon Volkov. Many investors purchase bank portfolios consisting of dozens, if not hundreds, of bank owned properties. By purchasing in bulk, investors are able to buy properties at wholesale pricing. They pass the savings along to their buyers. It's a win-win-win situation. If you're interested in purchasing foreclosure houses, take a moment to subscribe to Simon's RSS Investment feed.
Whether you are interested in purchasing a foreclosure home as your primary residence or as an investment, it's important to understand all the elements involved. Otherwise, you could end up losing a lot of money.
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