Guide For Investing in Foreclosures
Many investors will tell you that investing in foreclosures is a good way to make money in real estate.
While this can be true, it is not certain that you will make money.
Nonetheless, if done correctly, you can make a tidy profit in the end.
Due to the slump in the housing market and the recession, many foreclosures are taking place.
While it is horrible experience to go through, foreclosures are great opportunities for real estate investors.
Given the sheer number of foreclosures, lenders are trying to entice buyers with great deals and offers.
The lenders have put heavy discounts on foreclosed properties because they want to recover their losses and move on.
Therefore, based on how you want to use the property, you should be looking for the discounts.
For example, if you want to renovate and sell the property for a profit, you should be looking for a 20 percent to 30 percent discount; if you want to rent the property out with an option to buy, then you should be eying a 10 percent to 20 percent discount; if you want to just rent out the property; you should be happy with a 5 percent to 10 percent discount.
There are three ways to buy a foreclosure.
One is to negotiate with the homeowner before the lender actually forecloses the property.
Second would be to buy it through the county foreclosure auction; and lastly you can buy a real estate owned property, also known as REO.
A real estate owned property is one where the lender has bought it back in an auction.
This is the easiest way of buying a foreclosure, but you may not get a huge discount for an REO property.
When you buy a property through a foreclosure auction, you do not get the opportunity to inspect the property properly.
This can often cause a lot of problems as owners are known to damage and vandalize the property as a way of getting back at the lender.
In addition, you will have to wait for the redemption period to get over before the title is transferred to your name.
On the other hand, when it comes to an REO property, you will be able to inspect the house thoroughly.
In addition, usually these properties are the best in the foreclosure market.
You can even use a normal mortgage to finance the purchase of the property.
If you are interested in investing in foreclosures, check out the local newspaper and contact your real estate agent to check out the Multiple Listing Services.
You can also get information on foreclosures through the local government office or HUD office.
While this can be true, it is not certain that you will make money.
Nonetheless, if done correctly, you can make a tidy profit in the end.
Due to the slump in the housing market and the recession, many foreclosures are taking place.
While it is horrible experience to go through, foreclosures are great opportunities for real estate investors.
Given the sheer number of foreclosures, lenders are trying to entice buyers with great deals and offers.
The lenders have put heavy discounts on foreclosed properties because they want to recover their losses and move on.
Therefore, based on how you want to use the property, you should be looking for the discounts.
For example, if you want to renovate and sell the property for a profit, you should be looking for a 20 percent to 30 percent discount; if you want to rent the property out with an option to buy, then you should be eying a 10 percent to 20 percent discount; if you want to just rent out the property; you should be happy with a 5 percent to 10 percent discount.
There are three ways to buy a foreclosure.
One is to negotiate with the homeowner before the lender actually forecloses the property.
Second would be to buy it through the county foreclosure auction; and lastly you can buy a real estate owned property, also known as REO.
A real estate owned property is one where the lender has bought it back in an auction.
This is the easiest way of buying a foreclosure, but you may not get a huge discount for an REO property.
When you buy a property through a foreclosure auction, you do not get the opportunity to inspect the property properly.
This can often cause a lot of problems as owners are known to damage and vandalize the property as a way of getting back at the lender.
In addition, you will have to wait for the redemption period to get over before the title is transferred to your name.
On the other hand, when it comes to an REO property, you will be able to inspect the house thoroughly.
In addition, usually these properties are the best in the foreclosure market.
You can even use a normal mortgage to finance the purchase of the property.
If you are interested in investing in foreclosures, check out the local newspaper and contact your real estate agent to check out the Multiple Listing Services.
You can also get information on foreclosures through the local government office or HUD office.
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