subject: Bankruptcy And Investments [print this page] Investing in bankruptcies can be a huge money maker for a real estate investor. If the right property is chosen, investing in a bankruptcy can result in huge amounts of money for a real estate investor. There are some laws that chance regionally that govern bankruptcies. There are risks to the investor, and being aware can help your investing career by a lot.
One major risk with bankruptcies is that the owner can lay claim on their property and come back. There are some states that don't consider a bankruptcy complete for a certain amount of time. You need to know if your region has this type of law that protects homeowners when they file bankruptcy. If they do have these laws, you will want to make sure the home is vacated before making an offer. You don't want to put money down on something, only to lose it when the homeowner comes back.
A bankruptcy order is put into place when the owner defaults on the mortgage. The bank will then try to regain the property. Under the sheriff's sale heading, the bankruptcy property will be listed. The opening bid will probably begin at two thirds of the value of the home. The one with the highest bid gets the property. Investing in bankruptcies is a quick way to increase your portfolio.
Having a plan of action is crucial. Determine your plans for the property, first. You may want to rent the property or flip the house. To pick a good area, you need to know what you are looking for so that you can make a profit.
Your main priority should be choosing the right bankruptcy. Some bankruptcies will be depreciating, so make sure to look out for ones that will increase in value. The price may be right, but it may not be for you. Determining the average selling time of the ones that have been sold. This will give you an estimate of what you can get.
When you are investing in bankruptcies, look for the bottom line. If you cannot make a 10% profit, move on. You must know the market. Check out past sales. Know if the area is growing or declining. Know how long the other houses have stayed on the market. A bad investment would be a home that stayed on the market for 6 months. Remember that if no one else wanted it, it's a bad investment for you.
You will learn what to look for and avoid. You'll find some areas better than others. You will learn more about the real estate market. When you're investing in a bankruptcy, keep this in mind.
