Foreclosure Real Estate
Investing in foreclosure real estate can be a profitable venture, as long as you understand the pros and cons of the game. Foreclosure real estate can consist of residential homes, commercial buildings, vacant land and farm acreage. However, the more popular choice amongst real estate investors is single-dwelling and multi-family properties.
Oftentimes, foreclosure real estate requires considerable repairs or renovations. While foreclosure properties are usually sold well under market value, necessary repairs can quickly deplete your profit margin. Therefore, it is always important to conduct due diligence by obtaining comparative market analysis reports, professional appraisals, and repair costs estimates to determine the true cost of the property.
There are many options for locating foreclosure real estate. One of the more popular is through foreclosure auctions. The majority of foreclosure homes available through auctions are sold "as-is." Occasionally, homeowners or tenants continue to reside in foreclosure houses until they are forced out through eviction. When investors purchase a home where people still reside, they are responsible for initiating eviction action.
Due to the overwhelming number of foreclosure properties, many banks are engaging in short sale transactions. Using this real estate technique, banks accept less than is owed on the mortgage note.
Homeowners in the pre-foreclosure stage must contact their lenders loss mitigation department to obtain approval for a short sale. In most cases, borrowers have a specific timeframe to locate a buyer for their property. Oftentimes, short sale real estate can be purchased at 20- to 30-percent below market value.
One of the best ways to save money when purchasing foreclosure real estate is to locate a private real estate investor, such as Simon Volkov. Some investors specialize in purchasing bank portfolios consisting of real estate owned (REO) properties.
When investors purchase in bulk they are able to obtain wholesale pricing. In many instances, real estate is purchased for pennies on the dollar. This allows the investor to pass their savings along to buyers at deeply discounted prices.
REO properties consist of real estate which did not sell through foreclosure auctions. These properties are returned to the bank with a clear title. Most bank-owned property is sold directly through the lender. In some instances, banks work with realtors to expedite the sale of distressed real estate.
It is a good idea to work with an REO investor or foreclosure specialist when purchasing foreclosure real estate. These professionals can guide you through the process and help you obtain a lower purchase price or reduced closing costs.
Should you decide to invest in foreclosure real estate without the assistance of a realtor or real estate investor, it is imperative to thoroughly understand the pros and cons of this type of real estate investment.
Many newbie investors are tempted by low-priced foreclosure real estate. Remember, if distressed properties require extensive repairs, it can potentially cost a fortune to return the house to livable condition.
Unless you are able to purchase foreclosure real estate with cash, experts suggest obtaining pre-qualified financing. Not only will you know exactly how much you can afford, prequalified financing provides additional bargaining leverage and shows the seller you are motivated to purchase their property.
Before diving into investing, we invite you to spend time browsing our foreclosure real estate article library to obtain a better understanding of the process. We also invite you to subscribe to Simon Volkov's Investment Opportunity RSS feed, which provides numerous real estate investment opportunities delivered directly to your inbox.