Real Estate Investing: An Introduction to Investing in Foreclosures
If you’ve ever considered getting into real estate investing, or if you’re already a seasoned investor, foreclosure investing is another way to add to your real estate portfolio. You can find great deals on properties that are often undervalued and in need of repairs. However, it’s important to understand the risks involved before getting into foreclosure real estate investing.
Investing in foreclosed properties is a long-term business. When you invest in foreclosures, you are investing in the future of that property and not necessarily in the here and now. If you do your homework and understand what you are getting yourself into, then foreclosure investing can be one of the most rewarding experiences for any investor. It is important to know that there are risks involved with this type of investment so it’s best to be prepared for them before getting started.
Know Where to Look
If you're looking to buy properties on the cheap, you first have to know where to look. One of the best resources every investor should know about is Foreclosure.com. Whether you’re looking to find low-priced distressed deals like bank-owned homes, government foreclosures (Fannie Mae, Freddie Mac, HUD, etc.) pre-foreclosure listings, real estate owned (REO) properties and foreclosure auctions, Foreclosure.com gives you access everything in one convenient place.
Conduct Thorough Research
Conducting thorough research is one of the most important steps in any real estate transaction. It will help you determine whether a property is worth investing in and how much money can be made on it. This first step is to take a look at the property's history, past tax records, foreclosure filings, and other public documents to understand how long the home has been owned by its current owners, how much they've paid for it over time and if there are any liens against the property (such as unpaid taxes). All of this information can be found using public records, but can also be accessed by using Foreclosure.com’s property search portal. You should also find out what kind of shape it's in before acquiring it; this includes an inspection from an expert who can tell you about things like mold growth or structural damage that could make repairs costly later on down the line.
Get an Inspection
Similarly to when you are buying any other type of property, inspections are a crucial part of investing in foreclosures, and is an important way to know what you are getting into before you start making offers on properties.
Your inspection doesn’t have to be done by an expert; many investors will hire someone who knows what they are doing and then inspect it themselves after it has been inspected by someone else. If you want a second opinion on your property, then get another inspector in there for the final look-over before you close on it.
Hire the Right Professionals
As a real estate investor, you should hire the right professionals to help you with your investment business. Here is a list of professionals that I recommend:
- Real estate attorney - This is the person who will draw up all of your legal documents and make sure they are in order before closing. The best thing about hiring a lawyer is that he or she can also represent you in court if needed.
- Licensed real estate agent - This person will market and sell properties for you as well as give advice on how much to sell for, what type of financing to get, etc. A good real estate agent/broker will be able to help keep things running smoothly when there are problems with tenants or other issues arise during an investment property purchase transaction process (or even after).
- Title company – Find a title company/agent who is familiar with all areas of real estate investing and especially one who knows the processes of foreclosure investing. This will help protect you and minimalize any possible issues down the road.
- Property management company - If you are not handling the rental of your property on your own, finding a local and trustworthy property management company can save you from spending a lot of time and stress handling tenant issues, especially if you are investing outside of the city you live in.
Foreclosure real estate investing can be lucrative but it is a long term proposition and not for everyone. It takes time, patience and discipline to succeed, however if you have this in your DNA then you have the potential to make a lot of money from real estate investing.
