Buying foreclosures has always seemed like a shady kind of deal to a lot of people.
Here you are, trying to profit from the misfortune of others while enriching yourself.
Ethics aside, there is a potential upside to buying foreclosed properties, but you should always remember that any Real Estate transaction has it's hazards.
Many people choose to live in their new home, but a greater majority never intend on living in the property.
Fixing up the building and reselling it is by far the most popular choice.
Using the property as a rental unit can also be lucrative if the neighborhood allows rentals.
There are numerous things to think about before buying a foreclosed property.
1.
Can you afford the expense you will incur, regardless of which strategy you are expecting to use with regards to the ownership? • The cost of the loan and the interest expense on that loan.
How is your credit score? • Are you going to qualify for that loan? Talk with a loan officer before you get in too deep.
• The cost of property taxes.
Some areas are astronomically high! Check them out.
Do they seem too high for the area.
Do your homework.
• The cost of Homeowner Association fees, if any.
Are they assessed on a monthly basis or do you pay once a year? Does the HOA prohibit renting out the property? • The cost of fixing up the property - Be very careful on this one.
It can take a huge amount of time and money to refurbish a foreclosed property.
Seldom are they in good shape and many have been gutted by the previous owners.
• Is high speed internet and cable television available? What does it cost? If you have to use a satellite dish, is it acceptable to the HOA? 2.
Are you prepared to take the time required to really learn the technical aspects of buying a foreclosed property? • How well do you know the area where the foreclosed property is located? Is the Real Estate market stable there, or are you putting money into an endless pit that will suck you dry? • What are the regulations governing rentals in the area? Do you have to live in the house some period of time before you can rent it out? Are there other property foreclosures in the area? • Do you have kids that will need to go to school? Are the schools close? Check them out.
You may find that the district has an unacceptable graduation rate or other problems.
• Where will you shop for groceries and clothes? How about gas for your car? Most people don't think about these things until it's too late.
It seems like a small item, but shopping makes up a large part of our daily lives.
It needs to be convenient! • If you are figuring to buy the property and flip it over, what are your tax options and liabilities? What is your time frame? Can you really handle it?