Despite the downturn in the real estate market, investment properties continue to be sought-after commodities. Whether they are hoping for a quick turnaround in a sale or looking to lease/rent property while equity builds, investors may be able to realize a profit even in today's softening market.
Locating investment properties at affordable prices can require time and effort but because someone else's loss could be your gain, keeping your eyes out for “motivated” sellers may be key to your investment property success.
All right, let's just say it outright. “Motivated” in this case could be a euphemism for desperate. And while it may sound heartless, searching for pre-foreclosure sales and auction or bank-owned properties either online or by poring through public records at the county courthouse could be a fiscal win for you.
And if you're looking for reasons to feel any better about going down this investment path, consider this: if you purchase a pre-foreclosure property for an amount that covers both the owner's defaulted payments and the balance of their loan, then you have helped someone avoid seeing their property go to public auction.
In the event you can't make a deal with the owner of a to-be-foreclosed property and it does go to auction, you can make a bid at the public sale. Public auctions can be incredible opportunities for investors looking for a real bargain, but be prepared for the competition from other bidders.
The potential to see a profit on an investment property is very real, especially if you buy below market price and the property is in good shape and has positive cash flow immediately after the purchase. If the property is a good investment, you also should be able to expect the value to appreciate following the purchase.
A couple of words of caution. Real estate is more like a second job than it is an investment. You will be responsible for property maintenance, management, leasing and collecting rents. It is also a risky asset from a liability standpoint. Many tenants are particularly litigious and sometimes looking to blame someone for slipping on snowy stairs or in the shower. It is also negligent to think that you'll be able to sell that property at a profit when you want to convert it to cash.
There's a lot to consider when purchasing foreclosure property but by doing your homework, having your financing in place and making a realistic offer, you could come home with a bargain.
