Foreclosed homes may be the best type of properties to flip but that’s not all you need to know. It’s true that the rate of home foreclosures in the U.S. and the interest of investors in foreclosed houses are steadily increasing. However, as a real estate investor you have to look for the right homes and not just rely on any foreclosed property. A keen eye, the right knowledge and skills will help you succeed in any home flipping endeavor.
Investing in foreclosures is not easy and risky. Experts advise neophytes to plan and study their lessons well before venturing into this endeavor. Gather as much information as possible about foreclosures, where you can find them and their owners. Some of the important resources you can utilize are the foreclosure records at the county courthouse, the U.S. Department of Housing and Urban Development (HUD) and real estate agents.
The HUD site offers detailed information on homes including their size, the year they were constructed, the number of bedrooms and bathrooms and whether the property has been sold and at what price. On the other hand, you can go to the county courthouse and ask for the list of foreclosures. You may have to pay a certain fee for every page they print for you. In some counties, their records can be checked online but of course, you have to pay a certain fee too.
Real estate agents are also a good source because they are usually aware of potential and newly available homes. They can help you find out if the property has already been sold or not.
Once you’ve narrowed down your list of potential houses, check them out yourself. If you choose homes sold at a courthouse auction, though, you won’t be able to get inside to inspect the property. But if you prefer to buy from the HUD or a broker, you can conduct an ocular inspection and ask the neighbors about the home’s history.
Check out the neighborhood as well if it’s in a desirable location or in a stagnant one with no potential for development. Get additional data from tax records on the size and value of the home and the lot including previous sales in the area.
Consult a real estate lawyer so you can do a title search on the property. This is a necessary step to ensure that the previous owner no longer has any claim on the property. You may also want to consider getting a title insurance later to protect you from other claims.
If you have decided to buy the house, assess your financial capability and consult a lender before bidding. You might find it hard to avail of financing for a foreclosed home and if you do, the interest rates are usually higher than average especially if it’s for investment purposes.
Try to contact the homeowner who may want to reach a good deal with you. Being desperate in his or her financial situation or ready to sell the home right away, you can probably take advantage a good offer if you’re accommodating enough to them. Be sure, though, to determine what the owner really owes including the remaining amount on the loan, other fees, penalties and backpayment.
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