With the glut of foreclosure real estate in some areas which used to be prime markets, now my be the time to buy a house. However, is it time to buy more than one house? Whether you consider foreclosure real estate to be a good investment depends on whether you are willing to put up with some uncertain risk in the home and the market.
It’s true that foreclosure real estate can be purchased at a discount, but the risks getting in on a property after foreclosure can easily offset that savings. However, if you are handy fixing things up, or have a knowledgeable team of experts who can help you close a deal that will make you a profit, then it can be a good time for you to invest in foreclosures.
As stated earlier, foreclosure real estate comes with its own set of special risks. When homeowners lose their homes, they often don’t do it graciously. They may become so upset with the loss that they take extra pains to make the home uninhabitable. They might rip up the carpet or hardwood flooring, steal the appliances, or generally leave the house in filthy condition. Since most foreclosures do not allow an inspection of the inside the home, it’s anyone’s guess what you might be facing when you finally open the door to your new foreclosure real estate home.
If the borrowers left it in good condition, there’s still also the chance that vandals or squatters might have gotten to it during the time the old occupants left and you bought the foreclosure real estate at auction. Some homes are now being stripped by vandals of copper piping, which they get to by ripping out the electrical system first. This can add tens of thousands of dollars to the repair of the home.
Believe it or not, this is not enough enough to dissuade serious foreclosure investors. They typically are buying multiple homes and have a team of experts to help them navigate the problems. They may contract electricians and plumbers, as well as, lawyers for title and liens searching. Homes that foreclosure real estate investors buy may be had for huge savings, enough to make it profitable for them to replace the interior of the home, if necessary. While this is not ideal for the average homeowner, for knowledgeable investors, foreclosure real estate can be a great way to grab a home at a severe discount, fix it up, and flip it for many thousands of dollars more than it cost to fix it up.