If done right, a foreclosed home can be a great real estate investment that can provide you with an excellent rate of return. But, for you to navigate all of the do’s and don’ts of the foreclosure market, it’s important to fully understand all of the aspects and procedures of buying one of these distressed homes.
Is it a good investment? Can I get a mortgage on a foreclosed home? What are the risks? These are all very important questions, particularly the one about the risks; this one and many others I will answer below.
I will help you to better understand the exciting and often rewarding world of bank owned properties and will give you a step by step approach to this process, so you can take your new-found knowledge and get started investing in the perfectly planned, high rate achieving venture.
Yes, you can. In most cases, purchasing a foreclosed home is an investment rather than a first home, so chances are you already have a pre-existing mortgage. If you don’t, I will help you through the process of getting a mortgage so you can start searching for that dream investment property.
Before getting into the foreclosure market, there are a few questions that you need to ask yourself:
Finding the lowest mortgage rate possible is the next step. The difference between a few percentage points will save you a great deal over the years, so it is important to know how to get the best mortgage possible.
This is very important:
Once you have found the best mortgage rate and have been pre-approved, you are now ready to enter the exciting and rewarding world of distressed homes!
Stick around because later I will share with you some of the industry secrets that can save you both money and time on your next bank-owned property!
Now that you have been pre-approved for your mortgage, it is time to get serious about finding that perfect foreclosure sale.
Before you can begin purchasing a foreclosed home, you must find them first. This is where your real estate agent can help.
Let me give you a head start and a great piece of advice to speed up this search – email. That’s right – a simple email list!
And here’s the best part:
It is Free!
By signing up for the custom software program via email, I can link you up with many different foreclosure options and can tailor these options to suit your individual needs. There is no obligation nor is there any cost associated with this service. This is insider information that will give you a distinct advantage in the distressed home market.
If you are interested in this free service, sign up here. Remember, this service comes with no obligations and is delivered in an efficient and user-friendly way. If you are looking for that one tool that will give you an upper hand in the foreclosure sale market, then make sure to sign up for this free service today.
Once you have found that perfect foreclosure home – follow these next steps to financial freedom:
Remember that every foreclosure sale is an “as is” sale, meaning that what you see on completion date is what you are going to get. All of this information will be presented to you in a Schedule A form, make sure to go over it and understand it with your realtor!
For an even more detailed description of each of these steps and how you can use this information to gain a distinct advantage in the foreclosure market check this out.
Just like any type of real estate investment, buying a foreclosed home does come with a certain amount of risk. Being educated about the most common mistakes that buyers make when purchasing a distressed home will help you navigate the sometimes tricky world of foreclosure sales.
Follow these insider tips and gain knowledge-they will give you an advantage and make your next foreclosure home a great revenue generating real estate investment!
These important tips include:
These are just some of the many risks that can arise when you buy a foreclosed home. For a more in-depth look at these and other risks and how you can apply this information to avoid many of these common mistakes, be sure to read my insider tips.
This is one of the most frequently asked questions I get. The answer is:
As soon as the foreclosed home goes on the market, you can buy it!
The previously discussed automated email list is the most efficient way to see the new foreclosures that are available on the market. So, sign up today!
Moreover, your realtor will be hard at work checking the daily listings, so that you can be the first person to view these properties and their potential for revenue.
When purchasing a distressed home, you can make an offer at any stage of the foreclosure process. I highly recommend that you wait until the previous owners have moved out. This way, you can avoid incurring any more costs associated with damages that may occur to the property.
Foreclosure sales are final sales and are in “as is” condition!
Another important factor to consider when it comes to the timing of purchasing a distressed house is:
The longer a foreclosure sits on the market, the less money the bank is willing to take for that specific property, so sometimes patience is the key to saving large sums of money! Depending on the circumstances, the general rule is that the asking price will be adjusted once every 30 days to help generate interest in the property.
My suggestion is that you work closely with your realtor to help you gain an understanding of your local foreclosure market and when the best time is for you to invest in this market.
Now is the Time!
Take advantage of the ultra-low mortgage rates, the red-hot rental market and get involved!
Buying a foreclosed home is a sound real estate investment and a great way for you to generate revenue. Although a distressed house comes at a discount, there are some factors that you will want to consider before investing.
These next few points are important and will save you both time and money:
Many foreclosed homes have sat vacant for months and in some cases even years. This can lead to maintenance issues. Before buying a foreclosed home, it is important that you get a home inspection so you understand the total cost of the maintenance that will be needed in your new investment.
A typical inspection will cost between $400-$500 dollars and will give you a report on:
This is an important first step that will give you a far broader picture of the overall cost of your distressed home and whether it is a sound investment or a money pit that you should walk away from!
In addition to the maintenance costs that you are most likely to encounter with your foreclosure sale, make sure to seek out all the information you can about the history of the home. This information will help give you a better understanding of the previous owners, any renovations that may have been done as well as any liens, zoning laws or bylaws that may be applicable to the property.
Neighbours can be a great source of information about the home’s history so make sure to talk to them. Also, look at the overall neighbourhood and some of the other properties to see if this is the right investment for you!
Keep reading because later in this post I will give you my final opinion as to whether buying a foreclosed home is a good investment or not.
When it comes to buying a distressed home, it is important to understand all the costs that you will encounter on this investment journey. Here is a list of some of the less obvious and even hidden costs that are associated with a foreclosure sale and tips on how I can help you reduce these costs!
Some good news:
A realtor is a must when it comes to buying a distressed home. Their knowledge and advice will help you avoid some of the common pitfalls and mistakes that are so often made when purchasing a property. The best part about your realtor is that all of their services are free to you; the buyer. The seller, in this case the bank, is responsible for all realtor fees.
Other fees that you as the buyer are not responsible for include any liens against the home, outstanding property taxes as well as strata fees. These costs will be cleared off the title at the time of sale.
Unfortunately, you are still responsible for the property transfer tax, which is taxed at 1% on the first $200 000 and 2% on anything greater than $200 000 up to $2 000 000. After $2 000 000, the property transfer tax is 3%.
Remember, you as the buyer also agree to pay the outstanding portion of the mortgage of the home as well as all legal fees that are incurred during the process.
Other important costs to keep in mind:
Essential tips to keep your costs as low as possible:
In the U.S., the foreclosure process differs from state to state so it is a good idea to inquire with your realtor about the foreclosure process of that state.
Other factors to consider if you are entering the foreclosure market in the U.S.:
In Canada, there are 2 different ways that foreclosed homes are processed.
Regardless of the process, in both Canada and the U.S, you will deal with the bank instead of the homeowner for a final sale. This is an important piece of information because banks are most often unwilling to budge on price or the condition of the sale!
A foreclosed home is a great real estate investment, if you understand all of the costs associated with the project. A general guideline is that you should never pay more than 70% of the property’s estimated market value.
Here’s the deal:
A foreclosure property is not a deal if:
The best part:
If you are in the market for a foreclosure home, the great news is that the Vernon rental market is in high demand with a vacancy rate of only 1.9% for apartments. This low vacancy rate offers great returns on a rental property with many houses in the area renting for between $1500 and $2200 monthly. This high rate of return with the need for rental properties ensures that your real estate investment is sure to generate revenue!
To take full advantage of the low mortgage rates as well as the ultra-competitive and low vacancy rate, it is imperative that you act now. I would love to help you find the perfect foreclosure sale and get you started on the journey of turning that distressed home into a revenue generating investment! Act now, it is the right time and the right investment!
© Copyright 2017 Salt Fowler Team