Tips on investing on foreclosed properties

January 20th, 2011 § 0

Investing in foreclosed properties is not very easy to do since this involves a good deal of footwork plus putting into consideration the risk involved. You need to get your hands dirty and try to know the ins and outs of the real estate market, know the legal issues you need to deal with, and know the math how to make your investment move profitable.

Money + Hard work

The risk in foreclosure investing is higher than what you see on the TV or print ads. Profits might be attractive when you think of the end goal but  the steps to get there is pretty challenging.

When you buy a foreclosed property, this means that you are acquiring a property that was ill-maintained  because of financial difficulties mishandled by former owners. If you are planning to resell the property, there is a ton of repairs and cosmetic upgrades that you need to spend on. You can work on them yourself but if you are planning to hire contractors, they do not come cheap.

Financing your foreclosure investment

You need to prepare for the spending you will make through the repair process. The easier route will not to shoulder this alone and have some financial backers. Be sure to prepare a business plan for your project which will have projections and an exit plan when things don’t go as expected.

Studying the market

You may get lucky once if you buy a foreclosed property without really looking into current market conditions. The risk is too high and you can end up losing a good amount of money if you do not have the know how. You need to have an understanding of the market, tax implications, sales indicators, costs, and the list goes on.

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