If there has ever been a better time for taking advantage of the financial possibilities offered by home foreclosures, it has to be now. The recent financial collapse has created a market with millions of foreclosed homes and hundreds of banks and other lenders desperate for solvency. It is currently possible to take possession of a foreclosed home for pennies on the dollar.
Buying a foreclosure used to seem like a less than honorable proposition. After all, for every foreclosed home, there was a family that had lost a dream. These days the situation has changed. Many home owners are much more prone to let a house go back to the lender without a major setback having occurred. Foreclosures no longer necessarily come with the sad story like they did in the past.
Real estate is one of the best investments available. Many people consider their homes their greatest investment, but hard core investors purchase real estate without ever intending to live in the home. It is simply an investment that they intend to quickly turn into a profit. At the very least, the purchase will represent rental income.
As ripe as the market is for buying foreclosures, real estate investing always carries with it inherent risks. Before you sink your hard earned capital into one of these opportunities, you should understand exactly what the investment entails.
Though you might be able to get the house for a rock bottom price, because of the availability of homes and the depressed market, you need to be prepared to hold on to it longer than you would have had to do before. Flipping a house has become more difficult and real estate is once again a long term investment.
The loan market is much tighter than it has been for many years. If your credit score is not up to par, you might have to put down a substantial down payment. Be prepared for this and make sure you can afford the expenditure.
Since you might have to hold onto the property for a period of time, you must factor in the cost of property taxes. This can quickly eat into any profits you are hoping to make on an investment property.
If the home has been empty for a while, you will likely have to shell out some fix it up money. In a depressed market, the buyer will not settle for less than perfect.
Make sure you do the research on the area in which your property is located. It should be an area that is on its way to emerging from the slump and not one that was late in arriving. If you plan to rent the property while you are searching for a buyer, make sure you know the laws and regulations on renting in the neighborhood. Some areas are very strict when it comes to renting since the residents feel that owners are more responsible.
Foreclosures can be a great way to get a great deal on a home, but they are not always the answer. Do the proper research and make sure you have your plans in order before committing to this major investment.
By Robert Charlson