It's a tragedy that many people are forfeiting their homes during this sub-prime real estate crisis. It was recently reported that foreclosures account for 50% of the homes currently being sold in the US. Even though many people are losing their homes, there are many others who can finally afford a home or are now investing into real estate and taking advantage of these discounted prices.
Most real estate investors see this current crisis as an opportunity as it's the perfect time to buy cheap and hold until the market returns to normal. "There are always opportunities", explains Donald Trump. "When I first started out in Manhattan, everyone was saying what a terrible market it was". It's a good thing he didn't listen to anyone else's advice or he won't be where he is today.
Many of the most successful real estate investors currently see this as an opportune time to buy real estate (Mr. Trump is in this list) and see pre-foreclosures as the greatest means in which to negotiate the best deals.
The great thing about buying a pre-foreclosed home is that you are dealing one-on-one with the owner and have a chance to ask questions and inspect the house. Since the bank has time to evaluate the property there is a higher probability of being granted a mortgage.
When looking to purchase a pre-foreclosure you also need to pay closer attention to the macro aspects (I'll cover micro aspects in a later article) of the property in order to limit your risk as much as possible. Some of these property macro aspects are:
- Look around the neighborhood to see how many homes are being foreclosed. It's best that the house you're considering for purchase is the only one facing foreclosure. Obviously the more homes in forced sale, the more likely the properties will depreciate.
- Check with the local tenants to see what the rent levels are and whether they have been increasing or decreasing over the last little while.
- What is the local economy like at the town, local city and/or county level? Is the unemployment rate increasing or decreasing?
- Check with the local government to see of any upcoming infrastructure projects that will be taking place within 2-3 years. Projects such as new shopping malls, highways, train/subways lines, building permits for new businesses being established, new parks near the property, etc.
- Consider the age of the majority of the population within the community. If the majority of the local population is seniors that own homes, that could translate into an excess of future housing as they move into elderly care facilities.
If you do your homework and find the majority of these answers to portray a positive community, then you should consider buying in that area. Buying pre-foreclosed homes at the right time in the right place can prove to be a very profitable venture.
Most real estate investors see this current crisis as an opportunity as it's the perfect time to buy cheap and hold until the market returns to normal. "There are always opportunities", explains Donald Trump. "When I first started out in Manhattan, everyone was saying what a terrible market it was". It's a good thing he didn't listen to anyone else's advice or he won't be where he is today.
Many of the most successful real estate investors currently see this as an opportune time to buy real estate (Mr. Trump is in this list) and see pre-foreclosures as the greatest means in which to negotiate the best deals.
The great thing about buying a pre-foreclosed home is that you are dealing one-on-one with the owner and have a chance to ask questions and inspect the house. Since the bank has time to evaluate the property there is a higher probability of being granted a mortgage.
When looking to purchase a pre-foreclosure you also need to pay closer attention to the macro aspects (I'll cover micro aspects in a later article) of the property in order to limit your risk as much as possible. Some of these property macro aspects are:
- Look around the neighborhood to see how many homes are being foreclosed. It's best that the house you're considering for purchase is the only one facing foreclosure. Obviously the more homes in forced sale, the more likely the properties will depreciate.
- Check with the local tenants to see what the rent levels are and whether they have been increasing or decreasing over the last little while.
- What is the local economy like at the town, local city and/or county level? Is the unemployment rate increasing or decreasing?
- Check with the local government to see of any upcoming infrastructure projects that will be taking place within 2-3 years. Projects such as new shopping malls, highways, train/subways lines, building permits for new businesses being established, new parks near the property, etc.
- Consider the age of the majority of the population within the community. If the majority of the local population is seniors that own homes, that could translate into an excess of future housing as they move into elderly care facilities.
If you do your homework and find the majority of these answers to portray a positive community, then you should consider buying in that area. Buying pre-foreclosed homes at the right time in the right place can prove to be a very profitable venture.
About the Author:
To locate the best pre-foreclosure sites the web has to offer go to government auctions review or go direct to foreclosures
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