Flipping property in Real Estate implies purchasing a property at a lower price and then selling it out for profit after renovating or remodeling it. Fix & Flip has become one of the major investment strategies for all real estate investors who want to earn profit in a shorter period. Purchasing a foreclosed property is also one of the options considered by the potential fix & flip investors. But purchasing a foreclosure can be unpredictable and risky, and it demands flexibility and patience.
FORECLOSURE IN BRIEF
When the owner fails to pay the mortgage payment to the lender, the lender seizes and sells the property to the new buyer in an auction. Foreclosure is an often-lengthy legal process in which the bank takes ownership of the home and then sells it at auction. The investors can easily acquire such property as they get it 20%-30% below from market rate. It may seem appealing but this is not for investors who have just put their first step in real estate investments.
Foreclosure commonly comes about because the defaulter homeowners do not pay their mortgages. This can happen for other reasons too, like unpaid property taxes. From a purchaser’s point of view foreclosure has three distinct stages:
- PRE-FORECLOSURE – In this stage, the investor purchases the home from a homeowner who is putting all his effort into avoiding foreclosure.
- AUCTION – The property is announced in this stage and the investor with the highest bid wins it. The investor often gets the property at a price lower than the market value.
- POST-FORECLOSURE– The bank takes the control of the property and the legal process with documentation continues. Before actual eviction, the homeowner can use its right to redemption and get a hold of the property by paying the full mortgage.
.A BIG NO FOR AMATURE OR NON-PROFESSIONAL
People who hardly know the market of real estate or have just entered the space should not think about investing in foreclosed properties. Grabbing the property at a discounted rate is not fruitful unless you have deep knowledge about the investment and its strategies. It should not be a short approach rather it requires focus and extra carefulness that whether the property purchased is worth renovating or developing. The location of the property also plays a major role in deciding its future aspects.
GUIDELINES FOR PURCHASING A FORECLOSED PROPERTY FOR FIX & FLIP
- KNOWING THE MARKET VALUE – If you have accurate knowledge about the market area and value then you can easily determine the profit you will get after flipping it. The price at which you will purchase the property and the market price at which you can sell it after the remodeling will decide the amount you should spend on renovation.
- LOCATION – The location of the property is the core point of this investment. The desired location decides how long will it take to sell the property at the desired profit so that it should not be held for long. If the location is perfect, foreclosing can be a good deal.
- FOCUS ON? – When you go for seeing a foreclosed property have a keen look at the potential structural damage and any other electrical or pumping issues. Check upon the taxes being paid or not and total what it may cost to you.
- KNOW YOUR BUDGET – Do not forget to set up a budget for all your renovations and pre-setting up the house. Stick to your budget if you want to earn a good profit by flipping it.
FINANCING FOR FORECLOSED PROPERTY
The best way to purchase a foreclosed property is to pay in cash. You don’t have to worry about your finances when we at 5F ASSOCIATES provide 100% real estate solutions for all your financial needs. Our team works with great passion and enthusiasm and puts their endless effort into making the whole loan process uncomplicated and flexible.
We believe in the quick closing of deals and keep our funds ready only for your convenience. We deal in versatile loan options tailored for your specific needs and supply both short and long-term financing, long-term rentals, rehabs, fix& flip. We are your trustworthy and faithful financial partner for a lifetime.
Call us anytime for any questions and loan-related requirements.
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www.5fassociates.com