Investing in bank foreclosures is a risky game. Profits are made by buying houses foreclosed by banks at a discount and reselling them. While there is the possibility to make huge profits investing in bank foreclosed homes, investments in bank owned homes also involve considerable risk.
The risk involved in investing in bank owned homes is related to the condition of the bank owned property, the limited access you have to the bank foreclosed homes prior to the bank auction and the condition of the real estate market where the bank owned property is located. You can minimize these risks by having an experienced and skilled team on your side made up of a real estate expert, a financing expert and a construction expert. With these people on board you will be able to find the diamonds in the rough and avoid the lemons.
The process of investing in bank foreclosure homes involves five steps:
1. Use bank foreclosure listings and foreclosure information to identifying bank foreclosure investment properties.
2. Evaluate the potential of foreclosure listings.
3. Acquire financing and buy homes using foreclosure information.
4. Prepare home to maximize sale price.
5. Sell the home for a profit.
Obtain foreclosure informationBefore you can invest in bank foreclosures, you need to know what properties have been foreclosed on. To find this information you have two options, visit your local city hall for a listing of bank foreclosures or subscribe to a foreclosure listing service.
Assign value to your targeted bank-owned propertyAfter identifying potential bank foreclosures to invest in, your next step is to evaluate the home and determine what it is worth now and what it could be worth with a little work.
Amortize your financing for bank foreclosed homesIn order to buy a bank foreclosure you will need some sort of financing ready to go on the day of the auction. To help you determine how much you can afford to invest, amortize possible purchase prices.
Create a budget for preparing the investment property for saleThe key to making a profit in this industry is the budget. At the start of your project create a budget that makes sense for the project and stick to it.
Sell your bank foreclosure investment property for a profitIn order to make a profit you need to sell your property. To accomplish this, you will need a qualified real estate agent to work with.
- Investing in bank foreclosures is a team event. The stronger your team is, the more money you are likely to make.