Buying a foreclosed home is still a very good way to save a lot of money when wanting to get in to a new house. Also, there are a lot of opportunities out there to make some money flipping distressed properties. By flipping I mean to buy the home, fix it up, then sale for a profit. Four years ago I started getting involved in the foreclosure homes market with the intention to turn a relatively quick profit. The reason I say relatively quick is because, when you buy properties to flip, there is not much about it that is very quick. However, there are a few things you can do and know ahead of time to make the process take a shorter amount of time while optimizing profits. Below are a few tips to consider if you are thinking of buying a foreclosed home to renovate and sell.
1. Realize you will be buying the house as is.
This will prepare you to make realistic assessments to the amount of renovation required. Therefore, allowing you to immediately schedule any professional contractors for scopes of work you cannot do yourself. Also, factoring in the cost of repairs will give you an idea of how much profit will be made. Thus, enabling you to decide if buying the home is worthwhile.
2. Become familiar with the area and the market price for homes in that area.
This coincides with tip number one. You need to know how much money you are going to borrow so that you can figure out how much profit potential the house has that you are looking at. By knowing market pricing in the area you can assume a worst case scenario for sale price. Then, factoring in tip number one, come up with how much money will be made on the home.
3. Find out how long it usually takes to sell a house in your price range.
This is something to consider because if you are borrowing money from a bank you will be accruing interest that will be paid monthly until you resale the home and pay the bank back. You don’t want the interest to cancel out all the profit that could be made.
4. Locate a reputable agent that specializes in foreclosures.
You may want to ask the bank you are dealing with about an agent they recommend. Many times the banks only work with an agent or two that handles showing the foreclosed homes for them. Using these types of agents will help you find the best deals. Often times the bank’s realty agents will know about new homes that have not been publicly listed yet. This is a great advantage because the best deals go fast and you don’t want to miss them.
5. Have your mortgage already approved and finalized.
The last thing you want to do is find the perfect house for the perfect price and lose it because it took too long to get through the red tape. The market for buying foreclosed homes is full of fierce buyers with deep pockets.
Take the information above with you on your next home buying endeavor and hopefully it will help you make a more informed decision. If I had known what I know now I would have been more ready before jumping in to the battle of foreclosure home buying. Thankfully, I was able to learn quickly and pass on these tips for others to know ahead of time. Good luck on finding your next profitable venture.