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Foreclosure Real Estate Investment Strategies.

By Edited Nov 13, 2013 1 2

Foreclosure real estate investing can be a rewarding niche for those people who are willing to take time to research the market and learn the strategies. Foreclosed real property covers a assortment of properties including residential houses, vacant property, and commercial real estate.

When purchasing foreclosure real estate, it's vital that investors be financially ready to invest in required repairs or restoration. Although foreclosed properties are usually priced less than market value, homes needing a lot of repairs can quickly eat up any equity. It's important to know when a potential real estate investment property is worth spending a lot of money on. It can make or break your Real Estate Investing Success.

Investors need to use due diligence by going over comparable sales reports and getting home inspections, property assessments, and repair cost estimates by your contractor to decide the true cost of purchasing the property.

A few alternatives exist for locating Investment Real Estate foreclosed properties at below appraised market value. The most often way is to go to public foreclosure auctions. All properties represented through auction are sold in [as-is] condition. Purchasers must be ready to put forward payment in full within 24 hours when their offer is accepted. Once title is transferred, property owners are responsible for paying of creditor and tax liens and making any required repairs.

Another foreclosure Real Estate Investment Strategy is to find some foreclosure short sale homes. These properties are great and are in the middle of the foreclosure process and purchase negotiations happen with the lenders' loss mitigation section.

When using short sales, lenders are willing to accept less than the total owed on the loan. Properties are commonly listed with realtors or sometimes there sold directly through the finical institution. The short selling procedure can be multifactorial and drawn-out taking up to 4 months and even longer to complete. Purchasers must get prequalified financing before submitting an offer. It's crucial to note that banks seldom accept bids lower than the selling price unless property inspections show some major problems with the property.

Short sale homes can give investors a good deal, and for some a needed real estate investment solution but may not be the better choice for investors who take part in home flipping over or are wanting to use the property to generate rental revenue. Purchasers willing to wait out the procedure can typically buy these homes at 10% to 20% below the appraised value.

Another real estate investment strategy is known as real estate owned [REO] houses, these properties are homes that didn't get sell at the auction. Among the greatest rewards of REO property is homes are sold with a clean title. When the banks or finical institutions get back ownership of foreclosure real estate they get rid of any bound creditor and tax liens and start with eviction action, when foreclosed homeowners decline to get out of the premises.

Investors who take advantage can purchase homes in volume wholesale pricing and then pass savings along to single home purchasers. REO homes can frequently be bought at 20% to 30%below market price and give investors instant home equity.

It's important for real estate investors to learn about all aspects of purchasing foreclosure properties. A lot of newcomer investors are allured by the low price tag of these foreclosures, but neglect to account for the costs related to rehabbing the property.

Foreclosures, short selling and bank owned real property usually require some upgrades and repairs. Investors need to be aware of these costs by taking the time to calculate the true cost of the property prior to making their offer to buy. Otherwise, investors could have title to a money pit take could take them years to recover from.



Oct 25, 2011 8:05am
Good information for anyone who is interested in investing in foreclosed real estate. Like any investment, people need to do their research, and be smart about it!
Oct 25, 2011 8:11am
Thats for sure...You can make thousnds or lose thousnds. Thanks for the comment.
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