Learning How To Generate Money From Minnesota Foreclosures In Good Times And Bad

Minnesota foreclosures and how to make potential income from them might be a subject

worthy of study for those people in the Minnesota real estate market who think that buying a home or investing in one, even in this economy, might be a good idea. Since the housing bubble burst so loudly in late-2008, knowing how to maneuver in real estate when it comes to foreclosures is fairly important.

For the most part, homes generally end up in foreclosure for a number of reasons. Over the last decade or so, it became relatively easy for just about anyone to buy a home. Some of this was due to government regulations that encouraged banks to begin lowering their underwriting standards, for one. With zero down payments and low interest rates, the housing boom went on for quite a while.

This isn't to say, though, that everybody who bought a home should have been allowed to do so. Evidence of this fact is all around in the number of homes now in foreclosure nationwide. Currently, over 300,000 of them are going into foreclosure every month, including a significant number in Minnesota. For an investor or somebody considering buying property, though, this could actually present an opportunity.

That's because the age-old dictum that one should always buy low and then sell high would definitely be in effect when it comes to finding a foreclosed property and then selling it for an amount over what was paid for it. The trick, of course, will be in knowing that particular market in Minnesota that the home resides in and what could be pulled from it in terms of investment return.

Generally speaking, anybody interested in purchasing a property that has been foreclosed upon, whether as an investment or to really live in it, will want to look at REO ("real estate-owned") properties. These are homes that were taken back by lenders after they were foreclosed or after their owners gave up the keys and walked away.

These homes, as well, are just taking up space on a lender's books and not generating any income to the lender whatsoever. This means that the bank or lender might consider parting with the property for much less than it extended a home loan for back when it was purchased. Consider a $300,000 home that a lender might sell for $200,000 and it's easy to see what the return on investment would be.

What will need to happen, though, is that the home values in the area in which the property sits are going to need to support a price higher than the $200,000 it's going to be bought for. Perhaps the area features homes that are currently sold for about $250,000. Given that, it isn't unreasonable to expect the same selling price for the home being invested in as long as it's been cleaned up.

In reality, there's no real difference between investing in Minnesota foreclosures and investing in, for example, any other state or locality's foreclosures. The trick, as always, will be in being able to buy the property low enough and then turning around and selling it so that it returns enough of a reward to justify the purchase. But for investors savvy enough, just about any market and economy has potential for income generation.

by: Victor Marsen

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