Foreclosure Home Investing: Don’t Make These Mistakes

Perhaps you are looking for ways to invest in foreclosed homes to make more money? Foreclosure homes are very good way to invest and can often be bought at greatly reduced prices. As a seasoned investor you wold know that you need to be cautious how and where you invest your hard earned dollars.

It would be unwise to go ahead and purchase the first foreclosed home you come across. It would be wiser of you to take time to research the market and find the right foreclosure, the one that’s guaranteed to give you a good return for your time, effort, and money.

When it comes to finding the ideal investment foreclosure, there are a number of things that you will want to consider. First, you’ll want to look specifically for low-cost foreclosures. Many real estate foreclosures are sold at auctions, but there are many lenders who prefer to resell their holdings on the “traditional” real estate market, at a discounted price well below the current market value.

To maximize your chances of finding that perfect foreclosed home, you need to consider major risk factors to reduce your exposure. There are numerous sources of information available to the astute investor, including online listing services, real estate agents in your area, county clerk offices, local and national newspaper classified advertisements, and good old word of mouth advertising.

After you have researched the real estate market and compiled the list of potential foreclosed properties, the next step would be to get a good idea of the condition of each property. That would enable you to get an estimate for total repair costs. If you can, organize an internal inspection with your real estate agent but an external inspection will suffice if something prevents you from being there.

Bear in mind the fact that the lowest priced foreclosure homes generally require a considerable amount of work. It’s not as easy as many of the HGTV shows would like you to believe. But it is possible to purchase those properties at greatly reduced prices but you will definitely have to take into consideration the cost of repairs when bidding for those properties at an auction or when negotiating with the real estate agent.

Regardless of whether you have decided to keep the property and rent it out, or flip it for a quick profit, you will no doubt need to find interested buyers or long term tenants. So, before buying the foreclosed property, you will have to look at the home from the buyer’s or renter’s perspective.

Does it have good curb appeal? Does it have a separate outbuilding on the property for wood workers or those into DIY auto repair? Is the garage floor covered in permanent stains from an oil or transmission fluid leak? Is it in the right location, close to shops, restaurants, or even a Great Clips? Is there noise from a nearby freeway? These considerations are important and it can make a difference between profit and loss in the long term.

When buying foreclosure homes, one of the most important considerations is your instinct… your gut feeling. Use your best judgment in this situation and if the figures stack up, the property looks good, but your gut tells you to run, then do so. After you have a couple deals under your belt, this will get easier.

But if something about a home just doesn’t feel right, let it go and look for another foreclosed property that meets your criteria. You will eventually find the right one if you’re patient. Foreclosed homes that are purchased at the right price will realize some great future profits for the diligent investor.