How to Flip Foreclosed Homes
It’s a fact that with a busy lifestyle and rising cost of living, many people experience financial trouble notably in paying promptly important bills including their mortgaged homes. Fortunately, there are real estate flippers who are on the lookout for pre-foreclosed or foreclosed homes and who can provide instant cash to solve mortgage problems. Home flippers normally pay cash to ensure a speedy closing of the transaction.
So, if you want to earn huge profits in your home flipping projects, then it’s time you think about investing in foreclosed homes. Flipping a foreclosed home is about buying an undervalued residential property that needs repair and selling it again at a higher price.
Buying a foreclosed home or what is called the retail flip can be done any time but the pre-foreclosure period is ideal. There’s something you need to know, though, about foreclosures. It’s not true that bank is the only and best source in buying a foreclosed home. You can deal and buy directly from the homeowner if you have the necessary funds.
Foreclosure refers to the situation wherein the homeowner or a mortgager fails to pay the principal and/or interest payments on his or her mortgage. The lender (bank or financier), in turn, has the authority to withdraw the property and sell it according to the terms and conditions of the mortgage contract. The pre-foreclosure period starts when the homeowner misses his or her payment making it an overdue on the loan. A notice is then sent to the homeowner requiring him or her to make the needed payments to settle the dues. In most cases, homeowners who face financial difficulty are forced to sell their home to buyers for fast cash.
In this situation, both the buyer and homeowner benefit from the foreclosure. The homeowner gets paid in full and can appeal to several buyers by accepting different financial plans. The buyer, meanwhile, saves money by 30 to 40 percent when purchasing a foreclosed home which is really cheaper than normal homes.
Also, buyers are giving homeowners the chance to do some investments for his home’s improvement and/or to sell it at a higher value.
Investing in foreclosed homes can be done in several ways. One is to buy a residential real estate property and have it rented to avail of a regular monthly cash flow. Another way is to buy a home, spend a certain amount for renovation and resell the property at a higher price. Still another method is to buy an under priced home and immediately sell it at a higher value. There’s also wholesale flipping wherein the investor buys a distressed home under contract to purchase and then sells the contract for a fee to another investor who is the one who closes the flipped home. The primary investor, in this case, serves as the wholesaler amassing undervalued homes that are distributed to several real estate investors.
Take the time to know more about foreclosures and flipping foreclosed homes to be sure about what you’ll be doing. Do learn about the neighborhood you are targeting and get to know how similar homes are selling. From there, you can make your plan to guide you on your project or you can make a team that includes a home inspector, contractor, realtor, attorney and tax accountant. And most important of all is to be prepared for the worst to prevent shocks and surprises.
Want to Learn more about Flipping Houses? Download the Home Flipping Guide