| If you're looking at buying foreclosure homes and want | | | | bucks) and check out the status of the title. You will be |
| to save yourself a ton of money, then this article is for | | | | responsible for outstanding fees and liens if you buy |
| you. Most banks are trying to get their troubled | | | | the property. |
| property off of their books as soon as they can, and | | | | Step 5) Finance your Foreclosure. Banks always have |
| will often let them go for up to 50% of their original | | | | different rules for lending if the property is foreclosed. |
| value. However, they come with their own set of | | | | Most banks will not finance a house they deem |
| drawbacks. Follow the tips below and you should be in | | | | inhabitable. This usually means there can not be big |
| good shape. | | | | holes in the dry wall that expose plumbing or electrical |
| Step 1) The first thing you will need to do is find out | | | | wires, missing toilets, missing kitchen sink, and basically |
| what the comparable sales are in the area of your | | | | anything that makes the property not livable. They will |
| prospective foreclosure. Your Real Estate Agent can | | | | often require an outstanding credit score, a full |
| provide this information for you or you can go to a | | | | inspection of the property, and other steep |
| website called and obtain the information yourself. The | | | | requirements. Find out what your lender needs from |
| comps will tell you how good of a deal the prospective | | | | you in order to authorize your mortgage, and make |
| property is before you even look at it. If the property is | | | | sure you can qualify. |
| not at least 30% below the comps don't even bother | | | | Step 6) Evaluate the Total Costs. Repair to the |
| looking at it. | | | | property, outstanding debts if any, and closing the deal |
| Step 2) Look for Hidden Damage. Many foreclosed | | | | can be quite expensive. Add up the total additional |
| homes have tons of deferred maintenance and may | | | | expenses that you will incur when purchasing this |
| contain some pretty serious damage. Much of the | | | | foreclosure to the listing price. If the resulting price isn't |
| plumbing, heating, air conditioning, and electrical systems | | | | substantially lower than a non-foreclosed property in |
| may be in total disarray. In addition, many homeowners | | | | the same area, then maybe a foreclosure is not a |
| who may be angry about foreclosure may intentionally | | | | good idea. On the other hand, if the price is still |
| damage the property. | | | | substantially lower, then you've found yourself a |
| Step 3) When doing your walk through on a | | | | bargain. Congratulations! |
| prospective property, make a list of required repairs in | | | | Step 7) Lastly evaluate the Cash Flow. You will need |
| each room, and take lots of pictures. After you've | | | | to find out what the rental comps are for the |
| made a list of all the obvious repairs needed, you will | | | | prospective area and the size of the house your |
| need to calculate the cost of materials and also labor if | | | | evaluating. This information can be found in the |
| you are going to contract it out. The next step is to | | | | classified section of your local newspaper or on the |
| calculate the total repair costs and add it to the listing | | | | following websites: Craigslist.org and Next, add up the |
| price of the house. Lastly, always place an inspection | | | | total monthly expenses. Such as the mortgage |
| contingency into your offer. This will get you out of the | | | | payment, taxes, insurance, HOA fees, management |
| deal if you find hidden damage that will exceed your | | | | fees if you are not going to do it yourself, and add in a |
| cost analysis. | | | | 10% maintenance expense. Now take this total and |
| Step 4) Check for Title Problems. Many foreclosed | | | | subtract it from the average rental comp price and this |
| homes have outstanding property tax debts and other | | | | will give you the cash flow. I personally will not do a |
| types of late payments attached to the title. Make | | | | deal that will not give me at least three hundred a |
| sure to do a title search (which will cost a few hundred | | | | month net cash flow. It is not worth my time! |