With the current economy such as it is purchasing foreclosure property can be a very wise investment. You can buy the properties and resell them for profit. There are a few basic things you must do before embarking upon this journey. You must set your goals and implement a plan of action.
First of all you must be careful about the type of foreclosure property that you purchase. You goal is to make a profit so you do not want foreclosure property so badly in need of repair that you will not be able to resell the foreclosure property or you will have to invest so much money in upgrading the home that you will not make a decent profit.
Things to look for:
• Search out homes in relatively good shape that are still considered good quality homes.
• There is sufficient enough land or roam that you can add additions onto the house to increase its value.
• Make sure the foreclosure property is being sold well below market value.
• Check into the neighborhood to make sure that it is a decent area and will help increase the appreciation value of your foreclosure property.
• You will also be looking for the best financing available; lower down payments, lower interest rates, and lower closing costs.
• Aim for the least amount of money you need to borrow for your foreclosure property to generate the most on your investment.
Generally speaking interest rates are what creates the financial burden for homeowner or investor alike. If you can get even a small reduction in the interest rate on your loan, you are in fact reducing the over all loan by a significant amount. Interest rates represent two to three times amount of the principal loan when you spread them out over the total loan period.
Real estate is a lucrative business and though there are periods where the market is sluggish; over all, real estate is always a good investment. Banks and financial institutions are readily available to do business with foreclosure property buyers because they know that they can hold the property as collateral. There are some sub prime lenders who will lend you up to 125 percent financing if you are strapped financially. You can also get a second mortgage and equity loan against the equity of your future home or foreclosure property rental.
How to Continue on the Road to Success:
• Keep your expenses low, and plan for improvements to the property well within the first few years of your purchase (to avoid further deterioration and additional costs).
• Do as much of the improvements yourself without having to hire contractors.
• Live in the property while you are fixing it up in order to save on rent.
• Improve the property.
• Convert units into rentals for a steady flow of income and tax advantages.
To succeed it does not take a master’s degree in business administration, just someone who is willing to learn the foreclosure property (real estate business) and a willingness to improve the foreclosure property that you purchase.