Taking Advantage of Foreclosures

As the number of US homes in foreclosure approaches the 500,000 mark, and with the expectation that this figure will continue to soar, many are finding opportunities to capitalize on this housing crisis by purchasing homes from lenders who bought the foreclosed properties at auction. These “rehabbers” are coming back in force as prices have moderated, again allowing for a reasonable profit to be made on the upgrade and resale of real estate, after only a modest investment.

Many believe that the real estate market is “hot;” however, presently, this is only the case for buyers. Many rehabbers are aware of this and are busy purchasing homes for cents on the dollar, putting on a fresh coat of paint, refinishing the floors, installing new carpeting, and working a little “curb appeal”—and then quickly reselling it for a profit.

This is quite a shift, considering that less than two years ago, few homes on the market sold at even close to a discounted price. In fact, exactly the opposite occurred: prices were highly inflated, causing many investors to pay top dollar for sub-par properties needing improvement, resulting in the injection of even more money into the site. Some of these investors have realized that their property’s value is now less than their initial investment and are planning on either foreclosing or renting the property—despite generating a negative cash flow—however, these are far better options than ruining one’s credit while waiting for the real estate market to rebound.

Bank-owned properties (REOs) offer buyers an excellent opportunity to find a home that falls into the rehabbers’ favorite category of “below market price,” and Florida has thousands of bank-owned properties for sale. A rehabber’s stake depends on the market and neighborhood, so it is highly important to do one’s homework carefully. First time home buyers can also take advantage of foreclosure properties in Florida but need to keep in mind that most of these properties are sold “as is.” Thus, if planning on living in one’s purchase, a buyer should be aware of what upgrades are needed to make the home comfortable enough for the family’s enjoyment.

If looking for a bargain when purchasing a piece of real estate in Florida, whether as an investment or for occupancy, bank-owned properties are an excellent way to save thousands of dollars. Because foreclosures in Florida are on the rise, buyers have the upper hand. However, keep in mind that rehabbing a home is not for everyone: make sure to have limits and a budget in place in order to avoid becoming a statistic in this down market. Further, if prepared to hold on to the property for a year or more and watch the market rebound, a buyer can profit greatly down the road.

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