Investing in Foreclosed Property? 3 Points You Should Consider – by Jeff Adams

So, you’re all ready to invest in that remarkably beautiful villa with that “foreclosed” sign hanging up front! Investing in foreclosed properties seems like a great idea because the price you have to pay is not as much as buying a new home. However, there are certain aspects of investing in foreclosures which every new investor should be aware of before going ahead with the purchase.

Here are a few points for you to consider before you decide to invest in a foreclosed property:

1.    Is the Property Habitable?

Are you looking at a foreclosed home or a vacant plot of land? When it comes to foreclosed homes, there may be issues like dirty rooms or toilets, clogged sewage pipes, jammed cisterns, peeling paint or a leaking roof.

So, if you’re investing your hard earned money into dilapidated property, here is what you need to do:

  • Carry out extensive inspections of the property (if you are allowed to do so).
  • Take a home inspection agent along with you, and he will help you decide whether the investment will be worthwhile by helping you calculate the repair costs.

If the property requires too many repairs and improvements, which will ultimately weigh heavily on your pocket, it is a better idea to backtrack on your investment. However, if the foreclosed property requires very little or no renovation work, consider it a green signal and go ahead with the purchase.

2.    What is the Market Value of Property in the Neighborhood?

You need to be aware of the market value of the foreclosed property and the value of other homes in the neighborhood. Since the competition on foreclosed properties is so steep, it is best to first learn about the rates of similar properties, and if possible understand the current trends in the market.

In fact, there is a great deal of assistance on foreclosures that exists online as well. You can visit a real estate website and search listings of properties selling in the neighborhood to determine their value. You can roughly calculate the profit or loss you will be making on the foreclosed property and accordingly go ahead with the purchase.

3.    What is the Future Value of the Property?

The value of a property, whether it is an old or new one, is always measured by its estimated future valuation. The dynamic market for foreclosures is a wonderful investment option for real estate investors and those trying to score up on their savings, because the returns on foreclosures are quite lucrative.

Therefore, if you’re ready to invest in such a property, you must:

  • Get acquainted with the real estate market and understand how the property will fare in future estimates.
  • Consider whether you will use it for yourself, rent it out or sell it, because if you wish to sell the property, you will need to know whether immediate resale is possible

Foreclosures are a great idea for those looking for affordable homes which are far cheaper than their market value.