The best time to buy a foreclosure
Okay, you have heard so much about the big bucks that everyone is making in the real estate market and you would like to learn how they make all this money. The answer lies somewhere in how, when and what type of property they purchase.
If you look around at property that is for sale, you are sure to find many different types of investment property that bring in some good income and give you a positive cash flow. Some of these options are apartment buildings, condominiums, hotels, and other types of rental property, but none of these come without their own set of headaches. The fastest way to turn your investment into cold hard cash is purchasing foreclosure homes.
A home goes into foreclosure because the homeowners are not up to date on their mortgage payments. When a loan is in arrears a total of 90 days, a notice of default is filed with the county clerk and then the legal proceedings begin whereas the lending company will auction off the home for the amount that is owed on the loan. This can be a great way to get a very expensive home for quite a bit below market value. The lending company wants their money back that they loaned to the homeowner and the homeowner wants out of debt.
If you can talk with the homeowners prior to the auction, you may be able to purchase the home and save the homeowners credit rating at the same time. Once, you have purchased the home either through the homeowner or the public auction, you can now sell the property for full market value or rent the property to cover any mortgage loans you may have incurred.
Purchasing the foreclosure home will give you some income no matter if you decide to sell or rent the property. Remember, foreclosure homes are normally sold for what is left on the loan. That means, if a homeowner took out a $350,000 mortgage loan and today they only owe $200,000 on their mortgage loan, and the market value of their home has now increased to $400,000, you could purchase the property for $200,000 and then sell it for the full market value of $400,000.
However, you may have a few costs involved. The interior of the home may need painted, re-carpeted or other such cosmetic enhancements. But, if you did sell the home for $400,000 and you purchased it for only $200,000, spending a little bit on cosmetics will not dip into your profit that much.