photo credit: EdTarwinskiAbout five years ago the real estate market was a flipper’s paradise. Now it?s turning into a foreclosure nightmare. But some savvy real estate investors are turning these foreclosures into cash making opportunities by purchasing homes and then renting them. If the lightbulb just went on over your head, you’d betting pull on a lampshade and consider the nitty gritty details before diving into a foreclosed property investment.
First of all, take a look at the market. You may be purchasing in an area that isn’t really designed for renters and won’t draw the tenant population you need. You also may be purchasing in an area that has a lot of foreclosures and therefore you?re not likely to get the rental dollars you are hoping for. Basically, stay away from created subdivisions with McMansions.
Then consider the condition of the home you’re looking at. People that are facing foreclosures are having financial problems and in that situation most people let some things slide, things they don?t consider essentially, especially if the bank is going to take their home anyway. You may be looking at some hefty repair bills.
Look at the home’s history. It’s estimated that about 40% of all foreclosed homes were actually rentals before they foreclosed, this could mean there are still tenants and they’re not going to be happy tenants at this point as they?re facing eviction as the house is being foreclosed upon. It also means the landlord thought of the property as an investment and when the investment went south so did his or her interest.
So if you’ve still got the foreclosure rental investment bulb burning, although slightly dimmer, make sure you consider all the possibilities and investigate the property thoroughly before taking that leap.