The Silver Lining of the Foreclosure Crisis
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It may be a bad time to own or sell, but it's a great time to buy now that house prices are falling. Not only can one find a great deal hidden among the many foreclosures and short sales, the economic downturn has scared many people away from taking advantage of plummeting prices. Much has been said about the evils of foreclosure - abandoned houses, vandalized properties, increased crime. These are all negatives, yes, but a savvy investor can take a stripped home and turn it into a resale bringing thousands of dollars of profit or regular rental income. Successful foreclosure investors don't expect to get rich quick. They educate themselves, first, on property values, real estate laws (especially as pertains to foreclosures), and how to get more information about a property. Then they look for a property that could be improved enough to sell or rent. This can differ according to the investor's preferences. They need capital to not only buy the home, but also to restore it. Foreclosure homes can range from an empty, abandoned building to a trashed house with garbage strewn all over the place, missing fixtures and a galloping case of mold or termites. Don't discount these trashed houses. The more work it takes to bring the home back, the less money that you can buy the house for and consequently, the more profit you can eventually gain. Many foreclosed homes, covered in trash and desperately needing some new fixtures and paint, can go for many thousands of dollars less than a comparable relatively clean home. Make sure that what is hidden under all the garbage is genuinely a home that can be restored; the money you spend on a qualified inspector is more than worth it. Many people think of foreclosure investment as "flipping". One should not depend on a quick "flip" to profit by. Such sales, while they have happened before, are too rare for one to depend on. Instead, take the long view of a foreclosure investment. This is also where the knowledge of property values comes in - how long did it take comparable units to sell? How much did they go for? Are homes in this area selling quickly? Do you know people who are looking for this type of home? Questions like these will make it easier for you to determine the time frame that you are likely to sell your home by. Despite the rampant foreclosure crisis, people still need places to live. Purchasing foreclosure homes and refurbishing them so that they become rental units is one way of breaking into the foreclosure market, gaining equity and income. You can still sell the house while not losing money during the time you're waiting for it to find a receptive buyer. However, to do this, you also need to educate yourself on the current rental market - what's renting, what people are looking for and the many issues that will arise for you once you become a landlord. When you're thinking of your investment options, don't let the negatives of the foreclosure crisis close your eyes to what can be a lucrative way of making money. You need the desire to work with these properties to succeed, but the results can be well worth your investment. Looking at other ways money can be made, such as through renting, is also a way to take advantage of falling prices and interest rates. However, you must be prepared for the problems that each money-making strategy will bring with it. Investing with a clear purpose, knowledge of the market and a realistic view of the challenges is what is going to allow you to successfully take advantage of this crisis' "silver lining". |
About the Author
Visit LeslieEskildsen.com for all your Orange County real estate needs. Compare the market in surrounding areas including real estate in Rancho Santa Margarita.
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