Articles: Foreclosure

Buying foreclosure property is a good way to make money for many people. But if you're just starting out you need to look at some very important factors when buying. Here are five to keep in mind when you start your search for a property you want to invest in.

1. When you find a property in a listing that you think you'd be interested in, go and take a look at the neighborhood before going any further. The real estate slogan 'location, location, location' holds just as true for foreclosure property as it does for conventional house sales. The house may be beautiful, may be grand, but be sure to look at the other houses in the neighborhood. If they are in decline or are in poor condition your house will be more difficult to sell. That doesn't mean that it won't sell; it simply means that it may take more time to sell and you may have to decrease your selling price and take a lower profit. If this your first property it will be easier for you to start with a house in a better neighborhood.

2. Check to see how close schools are to the neighborhood you're house is in. Does the school have a good reputation? Other amenities to consider are shopping, parks, and possible neighborhood upgrades. Is shopping close by? Is there a neighborhood park for the kids? Is the city going to revitalize this area of the city? All of these issues will have an impact on how quickly you can sell the house. They also make great selling points to prospective buyers.

3. The condition of the house is a key issue. If a house needs major repairs this is a house to be avoided. Paint, paper, small repairs are all you want to take on, otherwise you will be losing a large portion of your potential profit, if not all of it. You're looking for a shabby house that's structurally sound. No major plumbing, structural or electrical problems. Remember that the amount of money you spend on repairs comes out of your pocket right up front.

4. When buying a foreclosure property you need to do a title search to make sure you are paying for only one mortgage. If there is a second mortgage attached to the house that you didn't know about before purchasing, you will have to resolve this second mortgage before taking possession. There may be other liens on the property, as well, and a title search will reveal this.

5. Take good look at yourself. Do you have the ability to finance a project of this size quickly? Do you have the ability to pay cash for a property, such as in a tax sale? Would having a second investor with you be a good idea? When you are buying foreclosure property it is essential that financing is available and ready. Banks do not like holding a property; they want to move it as quickly as possible. Timing is key at this point.

Buying foreclosure property as an investment can be a good way to make money. But, be sure to do your homework. It will pay off in spades.