Investing in Foreclosures
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As an investment tool, foreclosures can offer good value, however investing in foreclosures can be extremely risky if you don’t have a professional team behind you. When investing in bank foreclosures profits are made by purchasing houses foreclosed by banks at a significant discount, fixing them up if necessary, then putting them back on the market for a profit. The risk involved in this type of investment strategy is with bank-owned properties there isn’t full disclosure (what you see is what you get), you have limited access to the property prior to the auction, and the status of the real estate market in the location of the property. Following these simple tips below will help you make the best investment decisions when it comes to investing in foreclosure properties.
· Do your Research: Search the Internet for distressed or foreclosed properties to get a sense of what’s in the marketplace.
· Find a REALTOR: Use a professional REALTOR to help you narrow your scope and identify foreclosure deals that will work for you with the least amount of risk.
· Be Aware of Time Sensitivity: With distressed or foreclosed properties, you must be prepared to act fast. Purchasers must close on the specified date or run the risk of paying unwanted penalties.
· Have your Financing in Order: The time to qualify for a loan can take 1 – 3 weeks. Given the time sensitivity you want to make sure that all of your documentation is in order to speed up the loan approval process so that you close on time. If you are paying in cash, be sure that you have access to your funds. Remember your financing will need to be in order prior to submitting an offer.
· Be Smart with Your ReHab Projects: If you are purchasing a distressed property, receive 3 – 4 bids for cost of repairs if you are subcontracting the work.
· Get Comps from Your Realtor Before putting the property on the market: When you are ready to sell your property, ask your REALTOR to run a competitive analysis on similar properties in the neighborhood to establish a strategic plan to get it sold quickly and for the most money.
In closing, be selective. Not every foreclosed property will be a good deal and more than likely you will have to sort through a lot of properties until you find the one right for you and your situation.
For additional information or help getting started, feel free to contact us at 336-547-6529 or email us at chris@stanleyhometeam.com. You will find that our experience with foreclosures, pre-foreclosures, bankruptcies, and distressed properties in Greensboro and surrounding cities in the Piedmont Triad area will be valuable to you as you pursue your real estate goals.
