The Do’s and Don’ts of Foreclosure Investing

The real estate market looks great right now. Industry experts like Jeff Adams point out that property rates are low, lenders have relaxed their standards, and there is a huge inventory of properties available for outright purchase. In fact, the biggest real estate market is in foreclosures. With so many distressed properties on the market, buyers can pick and choose investment properties in any price range. However, investing in foreclosure properties is not as simple as it seems. There are a few do’s and don’ts that make investing in foreclosure properties unique.


  • Hire a local real estate agent who knows the locality. As they are locals, they will know the best foreclosure properties for investment.
  • Even after hiring a local agent, drive through the community and take a look at the area. Sometimes, the community may only have one or two foreclosed homes while other areas will have entire roads of foreclosed homes. Homes in these areas will require intensive repair and maintenance before they can be flipped or rented.
  • Keep a local contractor handy to evaluate the property and renovate the homes as soon as you purchase the property. This is the most expensive part of foreclosure investment and you should budget for it when you buy the home.
  • Do watch out for current renovations. Nobody is going to repair a home and then move out or sell it to a new buyer. Be prepared to find hidden issues in these areas or to find deferred maintenance in other areas of the house.


  •  Don’t get carried away by the sticker price. Sellers have been known to put low sticker prices on properties to attract buyers. Once buyers are invested in the sale, they may bid aggressively during auction thus driving up the price. Experts recommend having a budget and sticking to it at all costs.
  • Don’t bother calling up banks to find foreclosed properties. They don’t have the time or patience and they usually outsource the process to a real estate agency. Find other sources to locate good foreclosure properties listed for sale.
  • Don’t ignore due diligence. Even if the house looks great, pay strict attention to liens, attachments, loans, and special assessments that may be outstanding on the property. Hire a tax attorney or a real estate attorney to check the property for legal issues. If you can hire a property inspector as well to check the house for property issues, go ahead and do so.
  • Don’t be afraid to renegotiate the property price after you’ve viewed the property. This is because an inspection will usually throw up property issues that you can use as negotiating points to lower the sticker price.

Professionals like Jeff Adams, the #1 real estate trainer, urge newbies to learn about real estate investing before they actually enter the market. Buying property is expensive and foreclosure properties come with a completely different set of problems and advantages. By learning about the market, buyers will be able to avoid the most common pitfalls in real estate investing and make a success of their real estate career.