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Foreclosure Investment – The Pros and Cons

Foreclosure Investment – The Pros and Cons

Author: Karen

Opportunities and positives abound when considering investment in foreclosure homes. Competition in this field is fierce because all homes in this market are priced below their real value.

Instant riches is not what this type of vocation is about, however the long term results can make foreclosure investment worth the time and effort of entering the field. Foreclosure investment as a career requires learning the market and then checking market and sales reports on a daily basis so no changes are missed.

A career in foreclosure and real estate investment is filled with hard work. This area requires commitment because the investor’s return depends directly on how much effort they invest in opportunity and market condition research.

Part of the daily tasks is contact with property management firms as well as brokers who have current listings of foreclosure properties. Brokers in real estate are assets to the foreclosure investor because the have the resources to help locate foreclosure properties sooner. Even the local library can contain listings buried in various rooms which will help lead the dedicated researcher to foreclosure properties.

In some states in the US some individuals may be allowed to buy their property back or redeem it and until that stage is passed the investor is unable to make an offer or participate. Once the foreclosure property reaches a certain stage in the court proceedings the investor can step in and initiate the procedures required to make an offer and purchase.

Not all foreclosure investment properties are in top condition but even the shabby ones can be worth the effort spent in finding, purchasing and making them saleable. When a home is run-down it is often wise practice to repair it and put it in shape for a sale. Landscaping may need to be done and often major repairs must be initiated. These expenses can be difficult if it is not a home that the investor lives in, because no money can be realized until the house is sold.

The key to success in foreclosure investment is to assure that you; the buyer can maintain the mortgage on the investment property for a minimum of six months. Further the money should be available to repair the property, pay the taxes and maintain the house until a deal is negotiated with a buyer. If an investor fails to make the mortgage or maintain the taxes they could lose the house and all their investment to someone else.

These are difficult economic times and no one can predict when a home may go into foreclosure, emergencies occur, jobs are lost, or even a divorce can occur and the borrower can’t make their mortgage payment. When the foreclosure process begins the bank will take steps to repossess the home and begin the legal foreclosure process. At that point, they will begin the search for interested foreclosure investors.

Foreclosure investment carries risks with it which can be partially mitigated by understanding the market and there is always a demand for homes in any economic climate.


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