Ever since the housing market suffered around five years ago, homes that were foreclosed on could be found on just about every street in America. Many of those that didn’t get hit hard by the recession were able to take advantage of this by scooping up foreclosed homes for an extremely low price. They then would take these homes, spruce them up and flip them to qualifying home buyers for a large profit.
So that brings up the question, is it purchasing a foreclosed home still a good investment option? It’s not a simple yes or no question, there are a lot of different things to consider. It isn’t quite as lucrative of an investment as it was a couple of years ago, but there are still opportunities to be had.
On one hand, there are fewer homes being foreclosed on as the unemployment rate nears the 6.5 percent mark. This means that foreclosed homes are becoming a rarity, and the price that the banks are setting to get rid of them isn’t as low. This leaves the profit margin much lower than it was when there were an overload of these properties.
On the other hand, there are more people with the means to buy a new home than there were back then. We are entering a competitive market that favors home sellers, so those that are looking to purchase a home are desperate to find anything. This means that there is still money to be made.
But the question is, is it a fast investment option? Technically, no. The market is trending towards an increase in new homes purchased, so it is better to hang on to the investment for longer to really maximize the profit as bidding wars aren’t expected to end anytime soon. As a matter of fact, they are expected to heat up in the next five years.
That still does not mean that it is a terrible fast investment, as there is still a market for selling homes right now. You may not be able to get the profit that you are looking for compared to a couple of years ago, but the potential is there. It’s not advised that you invest in a foreclosed property if you are beginner at investing in real estate. It takes years of experience to truly know exactly what you are doing to maximize profit.
There are a few different ways of purchasing a home in a foreclosure process. There are auctions, pre-foreclosure, and buying straight from the lender after the foreclosure sale. Any property purchased before auction is a pre-foreclosure deal.
The investment of a foreclosed home is huge, so you have to know exactly what you are getting into. First, you need to look at the maintenance work that needs to be done on the home, as well as any repairs. This can set you back a lot farther than you had anticipated, as many beginners look only at the low selling price. The time and effort it takes to make a foreclosed home appealing enough for resale is massive, so always be cautious before investing.