Buying an investment property that is a foreclosure is a highly impersonal non-emotional decision, or at least it should be. As the case maybe you are buying it from a bank, not directly from someone who has ever lived there, it is an asset nothing more or less so your decision-making process needs to be aligned with this stone-cold reality. Because of all this their are some very important questions you need to ask yourself when buying a foreclosure, here are 6 such questions that will separate the wheat from the chafe for you and yours that will protect you bottom line and most importantly your sanity.
Are their liens/tax liabilities on the home??? Here is some good and bad news collectively, first if liens do exist as part of your negotiating process there should be absolved fully at closing freeing you up from the responsibility to deal with this after the fact. In some cases with the assistance of a good closing attorney who represents you solely ideally, which is critical and this can readily be done if you are proactive, in other cases not so often. B. How does damage to the property affect its valuation???
Quite often former homeowners who lost their homes to the bank will bear considerable ill will to those seeking to take their home away, this ill will results quite often in their damaging the home deliberately out of pure spite and vindictiveness. That being said whatever the damage it will be incumbent upon you to remedy any damages so the property can be marketable again and this is no easy task in some cases. These calculations are critical when you establish the price you wise to pay for the property and amply due diligence must be applied herein, as always the buyer must beware.
When did the home/foreclosure property sell last??? Sellers disclosures are critical here and are time-sensitive as well. It is important to associate yourself with a wonderful general contractor in order to put a tangible price together for all that must be done to market the property successfully in the future. This relationship needs to be one of absolute trust and shared competency. Disclosures will take two form one issued by the lender and one if you are lucky by the person who last lived in the property. Both should be taken with a proverbial grain of salt, assume nothing but verify all.
How long has the home been vacant??? This factor is relevant because the longer a property has been unoccupied the more issues may result that you as the new owner are solely responsible for. Case in point plumbing, roofing and appliances suffer the most during prolonged times of non-use. All of this once again can be addressed with the aid of a trusted general contractor who should be advising you every step of the way in the process.
What is the neighborhood like????? This is key as location, location, location, tends to be the key to valuation. Schools that serve the home are a big factor as well as are whether or not the neighbors take pride and maintain their homes and yards as well. F. Lastly are their other foreclosed upon properties in the area, after all, birds of a feather flock together. It can be very daunting to have mass foreclosures in a given neighborhood, this greatly increases the risk associated with what you are trying to accomplish. It is always best to find aberrant foreclosures surrounded by non-like properties that way your risk as an investor is greatly diminished and profitable returns for you and yours are nearly guaranteed. Always keep this and all the others in mind, but remember buyer beware is the clarion call you must heed.