subject: How To Profit From Foreclosed Homes [print this page] Foreclosed homes are popping up all over the place and over a million homes are now bank owned due to foreclosure processes which have caused them. It is possible for individuals to use foreclosed homes to their benefit by making a profit from them but it is not a get rich quick or easy process at all. It can be quite risky and you may not always succeed, especially the first time around but this is true for all investments and opportunities surrounding them.
Many different homes are for sale on the market and foreclosures can vary in their appearance, maintenance required, and neighborhoods in which they are located as well. It is possible to find homes in high class neighborhoods which are bank owned as well as homes in lower class neighborhoods that are severely behind in their routine maintenance and upkeep.
There is a catch when placing your investment opportunities in foreclosed homes and that is that the market is still in a pretty vulnerable state so you have to expect that when it comes to the overall conditions in which you are working. You will need a down payment for the home keeping in mind that the ideal buyer is able to put down at least 20% of the homes purchase price.
As an investor you can determine whether you are going to live in the home or rent it out to potential tenants. You should also analyze the market to determine what the good prices are for the area on a per square foot basis. Also, if you are renting, you need to be absolute certain that you take any costs you will incur for upkeep into account. Not all of the money that you bring in for rent can be applied towards the mortgage alone. Other costs include property taxes, upkeep on the home, and any insurance that is required for the properties.
It is also incredibly important to be aware of any liens or fees that are tied to the property you are considering purchasing. The only way for the fees to get removed and absorbed is if the bank takes ownership itself. Otherwise, you may get required to pay these once you obtain control of the property. As an investor, you always need to stay on your toes for potential fees and associated costs. This can be assured by checking the title to the property that you have an interest in.
Each market is different and you may get subjected to different prices for different markets. Some people in the foreclosure markets are able to purchase a home for as little as 50 cents for each dollar it is worth and then selling later for 70 cents on each dollar to make a decent profit when all is said and done. Be aware though that not all investment opportunities are going to have immediate returns and you may have to wait some time. Determine ahead of time if the wait is worth the profit you will earn.
