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1. Do the Research
Too often price conscious buyers rush into buying a foreclosed home with dollar signs and big savings in their heads. Although great savings and profits can be made from these properties it is important to do careful research of the home, the area, the previous owners, if possible, and potential challenges that may arise. Due diligence from the beginning is the key to making a sound investment. If it is too good to be true, or you’re being rushed into a purchase it may be better to walk away for a better opportunity.
2. Get an Inspection
“As Is” is just that. You should be extremely cautious when purchasing a foreclosure especially if the home has been vacant for some time. Empty homes often hide little problems that might have been noticed, but instead have worsened. Utilizing a quality home inspection company is crucial when you are considering buying any property especially in these situations. You may end up saving much more than money.
3. Know Why You’re Buying
Many people buy foreclosures to save money on a new home while others are looking to flip and fix, re-sell or as a rental. It is very important to carefully consider the reason you are buying before you place a bid, start making noise at the auction or signing the contract. If you are looking for a long term investment in a home in which to live, you can spread out repairs over a longer period of time and therefore slowly get their return on your investment.
If you are planning to fix and flip you need to make sure that you can still generate a profit even after all the money and time is invested. If you are planning on renting the home, you must still make the appropriate repairs before the tenants move in. You must then ensure the monthly rent will cover your costs, time and any future repairs that may be needed.
Buying a foreclosed home can be a great opportunity for a family or business especially in today’s economy. Taking the time to carefully evaluate the home, your motives and the market will help you be successful in your purchase.
For more information, look at one of the links below or contact us. We will be happy to help.