You have been looking at that house on the corner for some time. You know that the previous owners moved out some time ago – something about the widow not being able to afford the payments after the spouse had died. Still, the house is in great shape, sits on a prime lot, and you know that now that it is in foreclosure, it might be very easy to buy the house for a sweet price.
Foreclosure properties spell T-R-O-U-B-L-E for banks and finance companies. When they foreclose on a home buyer, they are suddenly saddled with a property that isn’t making money. Every day it sits in the hands of the lender, the property is costing the bank money. Often, to minimize these losses, banks will happily settle for selling foreclosed property at a reduced price – often well below wholesale or market value. Because of this, foreclosure properties represent a boon for investment.
But why real estate investing? Studies prove that real estate investing involves less risk than typical stock market investing, for a similar annual return on the investment – about 7% to 10%. There is more direct control over the investment – for example, if you are using your investment as a rental property, you control the price of rent, the terms of the lease, and the type of tenants that get to move in. And it is tangible – not just pieces of paper saying you own a share in something. This idea appeals to many people. For these and other reasons, real estate investment remains one of the best ways to make money.
When looking at real estate investing with foreclosure property, it is always wise to do some homework ahead of time. Some properties may come with strings attached… and despite that nice price you may have gotten at auction, you may find yourself unpleasantly surprised when the responsibilities of liens, taxes owed, or other financial banes, land at your feet along with that SOLD sign. Read the fine print, the finer print, and then the finest print. Enter into the deal knowing where the pitfalls are, and have a plan in place to avoid them.
Finding real estate investment properties is fairly easy. Foreclosures are as easy to find as your local bank. Banks generally keep track of their foreclosed properties, and are usually more than happy to talk to a potential buyer about them. Alternately, consider enlisting the help of a real estate agent who also specializes in investment properties. They can save you valuable time, steering you toward the properties that have the characteristics you want, within your price range or budget. The right real estate agent may even be able to help you find traditional or more creative financing sources to help you seal the deal.
Real estate investing is profitable. While not a get-rich-quick scheme, real estate investments, particularly foreclosure investments, offer a respectable return with very little outflow of your own personal cash and is a solid foundation on which to build for the future.
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Tags: bank owned, bank owned properties, foreclosure investing, foreclosures, real estate investing, REI, reo
