Investing in real estate is an excellent way of earning passive income. However, like most activities involving money, real estate investments are quite intricate, especially if you consider the types of properties you can purchase and turn into assets.
Nowadays, investors typically look at commercial properties for rental possibilities. If you’re searching for something smaller in scale, you may want to take foreclosed homes into account.
What Are Foreclosed Homes?
Foreclosed homes, or bank-owned properties, are houses repossessed by banks and are now in the process of being sold to the highest bidder. Banks typically offer foreclosed homes at a discounted price and a lower cost.
In addition, foreclosed homes provide an excellent way of making a profit, especially if you want to flip a foreclosed property with the goal of selling or renting it out.
How to Purchase a Foreclosed Home
Since foreclosed homes come with more affordable price tags than regular homes for sale, you can get these properties at a great deal. It’s worth noting, though, that the process of purchasing foreclosed homes is a bit complicated but not at all impossible.
Here are some steps you need to take to purchase a foreclosed home:
1. Work with a Professional Real Estate Agent
For starters, you need the assistance of an experienced real estate agent if you wish to purchase a foreclosed home. When looking for realtors, you need to take time to check their credentials, previous clients’ reviews, and licenses to see if they’re reliable.
An experienced real estate agent has the resources to find foreclosed homes in the area you’re eyeing. You can also expect them to provide information regarding the property, which typically includes why the bank seized it.
2. Consider Your Financing Options
Real estate investors willing to pay in cash almost always end up with the foreclosed homes up for bidding, but don’t let that deter you. If you can’t shell out a large amount of money, you can always apply for a mortgage loan to help you in this endeavor.
You need to look into your current financial situation and the type of loan that best suits you during the process. Afterward, you can go ahead and apply for pre-approval to strengthen your case when bidding on foreclosed homes.
3. Perform a Comparative Market Analysis (CMA)
Once you have figured out your financing options, you can move on to checking the properties in your chosen area. You might want to ask your real estate agent to run a comparative market analysis to get a better idea of each property’s worth.
A comparative market analysis helps you determine a fair price for the property you’re eyeing. You can also compare the surrounding properties and homes in the area to settle on the right price for the foreclosed home you wish to buy.
4. Do a Thorough Inspection
You’re likely looking to flip a foreclosed home in hopes of selling or renting it out. You should note that foreclosed homes come in an “as-is” condition, meaning banks won’t repair them before selling them.
With that said, you need to perform thorough inspections of foreclosed homes you wish to buy. Check the house’s interior and exterior, along with the property’s perimeter. From the roof to the basement, you must examine everything to know if it’s worth your while to purchase it.
5. Bid Quickly
Foreclosed homes come and go in a blink of an eye, especially if they’re in a decent state. That’s why it’s crucial to work with your real estate agent to formulate a bidding price, backed up by your pre-approval letter if you have one.
Bidding quickly secures you the foreclosed home you want and helps you acquire the property at a lower price.
Conclusion
The process of purchasing a foreclosed home may not be easy, but it’s definitely worth your time, especially if you have a keen interest in renovating houses that need some TLC.
For information regarding foreclosed homes in Apopka, FL, you should consider consulting with Orlando REO Professionals. Along with Apopka we also have bank foreclosure homes in Orlando, Florida. We offer expert real estate advice and can assist you in finding quality REO properties. Contact us at (407) 247-8559 or via email at info@o-reo.net to get started!