One of the reasons many real estate investors are looking into bank foreclosure houses for their investments is because of the allure of the flip. A flip is the process of buying a piece of real estate, making upgrades and repairs to this well priced home. Then, the home is sold on the market for a higher price. Most flips need to happen quickly to keep costs down and for many investors the balance of profit and costs pressures them. Can bank foreclosure houses still work well for the real estate investor even as the housing market falters?
Bank foreclosure houses are designed to be profit makers in many ways. For example, many banks will sell these homes for far below their property value because they need to get the cash back to reinvest. They are willing to take the losses more so than the typical home seller is. Nevertheless, banks are not willing to hand over these properties. They too have to make as much money on the process, or at least cut their costs as much as possible during the process.
There are risks to buying bank foreclosure houses and these risks continue to grow. As a flip, these homes do well when the homes are priced below their property value. Many bank foreclosure homes are not in bad shape and therefore will not need a lot of renovation. Yet, many of these homes are priced well right around their property value, making it harder to make a sizable profit off the process of flipping the home.
In order to make a good investment happen with these homes, consider this:
• Work with a qualified real estate investor that can help you find bank foreclosure houses priced below their property value. You need their help because these homes will sell quickly to other investors.
• Work with homeowners themselves to buy them out of their mortgage for less and to help them avoid the entire foreclosure process they are facing. Many are looking for people to buy their homes so they can start over.
• Have an appraiser available to you quickly to analyze the comps on the home at a moment’s notice. The same is true for someone to inspect the home for you. Unless you can do these things for yourself, you really need to take these experts seriously.
Bank foreclosure houses work well for many people in the business of flipping homes. Yet, you have to be sure that the market and the property is going to provide you with the best avenue for profit.