Flood of Foreclosures: Should You Invest?

The number of homes in or nearing foreclosure is growing, and some investors are taking advantage of the bargains created. But even with a steady stream of distressed properties coming on the market, jumping into foreclosure investing is dangerous, especially if you are not familiar with the process or new to real estate investing.

1.05 % of mortgages were in the foreclosure process in the 3rd quarter of 2006, according to the Mortgage Bankers Association.

While there are opportunities to purchase homes at reduced prices in many markets, they’re “cautious opportunities” - you can’t assume that just because a home is heading for foreclosure means that it is automatically a good deal.

Remember, even for pros, foreclosure investing involves some risk, as does any purchase of real estate as an investment, as opposed to a home (in which to live).

The transaction has to make sense financially, figuring in the costs of getting the property back into marketable condition, the value it’s going to have at resale and the length of time it’s going to take to find a buyer - if you do, in fact, plan on reselling immediately instead of holding it to rent out or live in. It’s also important to know if there are liens on the property.

Each point has its own complications, so tread slowly and do your homework first. We recommend beginners start out by sitting down with a The Kiper Team team member who has experience in the arena — someone who has done it before.

Dealing with a pre-foreclosure, for example, often involves negotiating with a distressed homeowner, and can sometimes be a delicate situation.

 Courtesy of : The Kiper Team Offices:(636) 898-123, HOTLINE: (314) 729-1010 CLICK HERE to email us.