Foreclosure Investing:
Investing in Foreclosure Property
If you're a real estate "flipper," you already know how much of an opportunity foreclosed properties can be.
When a home is being foreclosed, it is often being sold for a fraction of its actual value.
As an investor or flipper, if you can get a good home at such drastically low prices, it can end up being an excellent addition to your portfolio, or to your home flipping business.
Let's look at a few of the basic details here.
Just because a home has been foreclosed doesn't necessarily mean it's a dump or crack house.
Yes, there are some people who are either unable or unwilling to keep up maintenance on their home when they start having financial problems, but in many cases the homes are actually still in great shape.
Or they might just need a little bit of minor maintenance and repair.
Did you know most lenders actually hire companies to maintain the houses until they are able to auction them off?
Banks and lenders are not usually in the business of owning real estate themselves, so they don't actually want to be in possession of the properties they have to repossess.
This means investors might be able to make an offer that seems dirt cheap, but the lender is quite happy to accept.
Here's the kicker: you don't always have to pay cash for an auctioned home.
- Many new investors are under the mistaken belief that they have to have a full cash payment upfront if they buy a foreclosed home.
- This is not usually the case!
In fact, there are many times you can get conventional financing to buy the auctioned home.
Before you start trying to invest in foreclosed homes, however, it helps if you know a little bit about the foreclosure process.
In some states the lender must get a judgment through a court proceeding before they can start foreclosure. This is known as a judicial foreclosure.
Other states, however, do not require court proceedings. This is known as a nonjudicial foreclosure, and the lender simply has to file paperwork at the county recorder's office.
Once the court judgment is issued or the paperwork is filed, the homeowner then has a specific period of time where they can correct their problems. This redemption period will vary from one state to another.
If the homeowner is not able to fix the financial problems and bring himself out of foreclosure, the house will be auctioned.
That is when you can possibly invest in an excellent property for very little money.
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