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Cash In With Foreclosure Property

Mar 3, 2008
We hear it every day. The number of properties being repossessed is on the rise, but what you don't hear is that there are individuals and companies that have started to invest in those properties whose owners are in financial distress.

It goes even further than that as there is a national trend developing with these home owners who are desperate to stop the repossession of their homes. These debt ridden owners who are having difficulties keeping up with the monthly payments are offering up their properties at heavy discounts more and more often.

What the sellers need in these situations are buyers that are able to move quickly to take possession of the property. The objectives are usually just enough money for the seller to pay off any loans and arrears to stop the foreclosure, even if that means that the seller will be giving the property up at a heavily discounted price.

Due to the foreclosure situation these savvy investors have seized on being able to purchase these properties at bargain prices from home owners in financial difficulties. It helps the home owner avoid the foreclosure and eviction process and creates a profit opportunity for the investor.

Investors see this as an excellent opportunity and time to build up a nice sized property portfolio. One they can sit on while renting the property to tenants until the market turns around. Real estate is a cyclical market and those that understand capitalize on the changing trends.

There is a couple down sides to this. Generally when a home owner can't make the payments on the home they also cannot maintain the home. Meaning they are generally in poor repair when purchased. So the investor may get a discounted price, but they will also get a home that needs some work. It is a good idea to have a very good understanding of what might need to be done to the home and any costs.

It only makes sense that a home owner going through foreclosure would not have the funds to properly maintain the home and keep it in good repair.

Purchasing a home in this way may also represent an opportunity to find a renter. The seller may want to remain living in the home by paying rent on it. If you get into this situation you need to realize that the tenant might not have any cash reserves in savings. They might also have irregular income which might mean a risk of getting rent paid on time.

In these less than perfect situations the landlord may be forced into eviction proceedings. If it comes to this the tenant may not be too happy with the situation on a property that they once owned. Meaning they might not go quietly.

One final item for you to consider if you are thinking about investing is the cost of borrowing. Right now the interest rates are near historic lows and there are many properties priced as bargains. This is very rare and will not always be that way. If you are in a position where you would finance your property investment, you may not get a better time to do so. Factor in the cost of potential interest rate hikes in the future when considering property investments.
About the Author
Get your home listed on the most trafficked Denver Real Estate website. When you want to sell your home, you want it seen. Find additional real estate resources at the Authority Real Estate Web Directory.
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