If you are new to real estate investment, you should consider investing in foreclosure properties. Experts like Jeff Adams state that the profits from foreclosure properties can be huge. However, there is an awful lot that can go wrong if you aren’t careful. One disastrous investment can literally destroy your entire real estate career.
As a result, experts like Jeff Adams #1 Real Estate Trainer recommend that you learn a little about foreclosures and the foreclosure process before you start. The 2015 foreclosure market is also a little different from the 2009-2011 market and there are a few things you should know before you invest.
Investing in Foreclosure Properties: Current Scenario
The mortgage crisis of 2008 caused defaulting homeowners to return their properties to lending institutions. Banks were stuck with a large inventory of property. To recover their investment, they started selling property at cut-throat rates. From 2009 to 2011, large investors were able to buy up big chunks of property all over the state and inventory decreased rapidly.
However, 2015 is slightly different. Foreclosure rates are expected to increase as financial reforms implemented in 2009 are terminating in 2015. Mortgage rates are rising and industry watchers expect foreclosure and short sale rates to increase steadily. For investors, this is a good time to start searching for affordable properties. By being careful, investors can easily find homeowners who are willing to short sell their property at an affordable rate.
Choosing Foreclosure Property
The rules of choosing foreclosed property are the same as investing in any other property.
- Before investing, make sure you check the home, the neighborhood, local property rates, crime rates, resale value, rental rates, etc. Once you have this information, you can approach the homeowner directly and make an offer for a short sale.
- You can also check bank notices, local county notices, newspaper ads, etc to find homes in pre-foreclosure. Short sales and pre-foreclosure properties are a good way to buy property before it enters a legal and financial mess of red tape.
- If you like a property that has already been foreclosed on, you may have to attend an auction and bid on the property. Banks usually auction their properties to get the most return on their investment. However, these properties are usually in an as-is condition. That means they are not maintained and you may have to deal with squatters, tenants, or even property damage.
Make sure you evaluate the property before you put in a bid. As rental rates rise, people are more likely to move towards buying. First-time buyers are already flooding the market looking for affordable properties. With the rising mortgage rates, it makes sense that they will buy before rates go too high.
As foreclosure properties are already priced below market-price, investors will flock to this option first before investing in any other kind of real estate. Just take the time to learn as much as possible about real estate and make sure you buy as intelligently as possible.
