Investing in Foreclosed Homes
In this day and age we have the unfortunate situation of foreclosures across the US. But for some foreclosed homes are an opportunity for those want to buy investment property.
If your thinking about getting a loan for one of these types of properties you’ll need to know a few things. Getting a loan for a foreclosed property is like getting a mortgage for a residential property.
One key different for a loan for a rental property is you’ll typically pay a higher interest rate. You’ll also need to have specific information available to your lender in terms of rent that will be collected to make mortgage payments. Many of the programs that are available to residential owner occupied properties won’t be available to those looking at rental property.
Many foreclosed homes are in rough shape since many people do a number on the houses before they leave them. You’ll need to select a home that’s in decent shape otherwise most lenders will pass on them. You’ll have to have all the information for the lender available cause they will want to see that you’ve done your homework and not just the home but the market as well.
In order to get prequalified you’ll need to know what the guidelines are for investment property, you’ll lender will give you all the details. If you’re going to attend an auction you’ll need to have a significant amount available for a down payment to secure the property while you set up financing, just food for thought.
Auctions can be a gold mine in terms of investment properties but keep in mind you are not the only guy that’s showing up with a big checkbook. Many pros have all the tips and tricks of the trade and you’ll get no time to inspect the property before you buy so you’ll need to know what to look for in terms of information. If you’re starting out it’s probably best just to wait for the properties that don’t go at the auction and are on the open market available for all. You’ll get more time to have the property inspected and uncover whether or not is a solid property fit for an investment.
Investing solo can be very scary so if a friend or family member has an interest in starting out in real estate investing and the fit is right joining forces and minimize any losses. Combining the due diligence effort will help with whether or not you’ve found a solid gem to invest in.