The PropertyLark Guide to Buying Foreclosed Homes, Part 3
In this 3-part PropertyLark Blog series, we have been exploring what you should know about buying foreclosed homes if you are a real estate investor. In Part 1, we discussed the advantages and disadvantages of purchasing properties in foreclosure (click here to read). In Part 2, we talked about the different types and stages of foreclosure.
Today, we want to focus on the process. Here are some of the key things you need to know when buying foreclosed homes.
Where to Find Foreclosed Properties
Online resources have made it easier to find properties in foreclosure and pre-foreclosure. Some banks will have special listings on their websites. You can find many foreclosed properties on the Multiple Listing Service (MLS), through city and county sources, on sites like Fannie Mae’s HomePath.com and through general Google searches.
You can also join the PropertyLark home buying network for exclusive access to our distressed properties. We buy many properties from sellers in pre-foreclosure. We run the analytics and help you find excellent real estate deals.
How to Finance the Purchase of a Foreclosed Property
Buying a foreclosed property can often be tricky for regular home buyers who are looking to take out a conventional mortgage loan. Lenders like to mitigate risk as much as possible and many foreclosed homes present major risks—at least from a residential homeowner standpoint. Still, there are programs like the FHA 203(k) loan designed to help foreclosed property buyers.
Savvy real estate investors have a distinct advantage when it comes to buying foreclosed homes because they are usually backed by solid financing. Whether you’re paying cash, part of an investment group or financing in some other way like you would any real estate purchase, you aren’t dealing with the same lender concerns as a regular home buyer. Ideally, you have a strong investment plan, renovation budget and secure financing. Banks who own the REO properties will be willing to work with you. You can take the distressed property off their hands, generally at a great price.
Of course, there is more red tape to go through when buying foreclosed homes. You have to be patient and persistent to get what you want. If you are successful, you should be able to purchase some excellent investment properties at below market value.
Developing Your Investment Plan
As we mentioned, it is important that you have a sound real estate investment plan. This is true for any investment property purchase, whether you are planning to buy and hold for long-term rental income or fix and flip for immediate profit. Success is all about having a plan, budgeting carefully and taking all the necessary steps to ensure the best possible results.
Having a strong investment plan is especially critical when buying foreclosed properties. There is extra planning and work involved, and you have to be careful to avoid getting yourself in a bad situation. On the surface, buying foreclosed homes at below-market value seems like a no-brainer. The truth is it takes a lot of brain power and hard work to make a foreclosure a successful investment. You should not go into the process without proper planning!
To join the PropertyLark home buying network and gain access to our exclusive analytics tools, home search resources and other member benefits, apply today. Fill out the contact form and brief buyer questionnaire on the buyer pages of our website to get started.