Tips for Turning Bank Property Foreclosures into Rentals

Tips for Turning Bank Property Foreclosures into Rentals

Buying bank property foreclosures and turning them into rentals can give you regular sources of income as long as you research, plan, implement and make the needed adjustments as you manage your rentals.

First, you need to ask yourself if you are able to be a landlord. This is important because you need to have a stronger personality to be able to deal with renters, collect rent, implement what are in the contracts, and evict tenants who lose their sources of income and unable to pay the rent.

Secondly, you need to look at your investment money. It should be enough not only for the down payment and closing costs for the foreclosed property you are going to buy, but also for costs of repairs, HOA fees, taxes, insurance and other unexpected expenses. You should also set aside reserves for the initial months you do not have tenants or for times renters leave without immediate replacements.

Now that you are ready to buy a foreclosure and be a landlord, the next important thing is finding and choosing bank property foreclosures with the greatest prospects of getting good tenants and strong investment returns. Of course, foreclosed properties in the best locations are the best, but the prices may be beyond your budget. What you do is to find the property within your budget in a neighborhood near major transportation links. It should have access to schools and to facilities needed by renters you are planning to target.

Additionally, make sure that you are buying a housing unit in a subdivision or a condo building that allows renting out. Some housing associations set a certain percentage of units for rentals; others do not allow any rental unit at all.

Lastly, hire a licensed and experienced inspector to do a thorough inspection of bank property foreclosures you are planning to buy. This way, you will have an accurate estimate of your repair costs and you can negotiate better the final purchase price with your seller.

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