The past few years have seen the collapse of a major housing bubble. As a result, the real estate market is prime for investors right now.
One of the most lucrative investment markets available today are foreclosed homes.
How To Successfully Invest in Foreclosed Homes
Investing in foreclosed homes comes with unique risks and rewards.
You often risk coming across houses that haven’t been taken care of, presenting great restoration challenges.
But in turn, you also have the benefit of buying a home for a significantly reduced price (averaging between 30% and 60% discounts), allowing the opportunity to fix and flip for a substantial ROI.
- The first step in investing in foreclosed homes is to ensure your own safety. Make sure the new lender and owner have title insurance. If they do, then even if the home was repossessed incorrectly, the former owner can’t take back the home, and you won’t lose your investment.
- Work with a reliable real estate agent to make sure you are finding the most quality foreclosed upon houses that will afford you the greatest ROI. Most often, banks own foreclosed homes, abbreviated REO (real-estate owned by bank). You could buy foreclosed homes directly from the bank, but a real estate agent is an essential filter between you and the bank to make sure you are getting the best deal available to you.
- Judge the investment property yourself. Even if you’re working with a real estate agent, it’s important to look beyond the quality and condition of the house. Make sure to check out the surrounding neighborhood, the local schools, population statistics, crime statistics, etc. Basically check out the same features you would if you were buying any other house.
- Follow your common sense and make decisions how you would for any other potential investment property.
Is Investing in Foreclosed Homes Safe?
Yes, it’s as safe as investing in any other house. The key to protecting yourself in foreclosure situations is title insurance.
There are two kinds of title insurance, the owner’s policy and the renter’s policy.
- An owner’s policy generally covers the actual market value of the house at the time of the purchase.
- A lender’s policy generally covers the actual amount of the mortgage of the house.
As long as the new lender and owner have title insurance, your interest and property are protected.
Finding Foreclosed Homes to Invest
I am a Denver and Boulder real estate agent, and I watch the real estate market in the area every day for new investment opportunities.
If you’re looking to invest in a foreclosed home, I can find good investments for you to decide from and save you the time and hassle.
Once you’re ready to start looking at foreclosed homes in Denver, let me know, and I will find you the best options available to you.