I get at least one email a day from a client or acquaintance who wants to know if they should be looking at foreclosures as an investment opportunity.

The quick answer is "I don't know, it depends..."

Buying foreclosures at a public auction is not for the faint of heart.

• Most of the properties are offered "as-is, where-is", and very often bidders will buy them without even having had the opportunity of conduting a home or termite inspection, given that there may still be a hostile homeowner living there. You may end up buying a "lemon" that may eat up all your profits.
• If you are the successful bidder, you most probably will have to pay more than the first lien is owed (otherwise the lender will buy it back), and buy paying 10% down, balance in 30-days - no contingency.
• If it is a tax sale, in SC the former owner has a 1-year redemption period so do not consider the property as yours until after this period...
• If you are successful, you may have to evict the former owner and his/her family. How do you feel about this?

However, if you are interested in looking at investming in real estate, the time is right. Ask yourself the following questions:

1. How much money are you willing to invest? Are you able to borrow the rest (i.e. have you talked with a lender?)
2. What time horizon are you considering for your investment to pay off? Are you going to be a "quick flip" kind of investor, or a "buy and hold" one?
3. What are your investment objectives (i.e. cash flow, capital gain, tax writeoffs)?
4. How much time do you have to invest in this project (days, months, years, decades)?
5. Do you have the right "team" assembled to help you (i.e. REALTOR, attorney, lender, insurance, handyman, etc.)?
6. What level of risk are you comfortable with?

Once you have the answers to these questions, explore the following options with our REALTOR:

• Pre-foreclosures (short sales, seller financing, etc.)
• Foreclosures (buy at public auction)
• REOs (lender-owned)

Depending on your financial position, your investment objectives, your experience and time horizon, your REALTOR may be able to recommend one or more types of investments strategies to choose from.

Trackbacks (0)

Comments (0)