Foreclosed properties look unattractive, but they are the best kind of investment. You can get them at a low price and sell them again with a great profit margin. However, it may require a lot of work and can be risky for the investor. Here we are discussing investment in foreclosed properties, particularly condominiums. The pros and cons will have you to make better decisions.
What are Foreclosed Condos?
If a person buys a condo and takes a mortgage from a bank or any other lending agency when he fails to pay the mortgage, the lending agency takes possession of the house. Then, the bank put up the house for sale to recover the mortgage amount. But investors need to understand that foreclosed Condos are not like any other foreclosed deal. If you buy such properties, you have to put in an extra effort to make them profitable.
What makes Foreclosed Condos a good investment option?
If you are planning to buy a foreclosed property, you must know the pros and cons. It will help you to decide either you should go for this deal or not.
Sellers are ready to sell: Foreclosure has a very bad effect on a person's credit score. So, if an owner sees that foreclosure is the last option left, tries to sell property before the bank takes over. So, he wants to sell it as soon as possible, and for that, he gets ready to sell it even at a very low price. You can easily negotiate for a price and quickly close the deal.
Low price Purchase: owner wants to replay the mortgage as soon as possible, so he can agree to any price you ask for. You can get a foreclosed condo lower than its actual market value, making it the best investment deal.
No delays: There are no delays in such deals. The seller wants money, and he is ready to close the deal as quickly as possible. Usually selling process takes very long, but a foreclosed property deal can be closed in a few days.
What are the drawbacks of buying a foreclosed Condo?
When you know the pros, you must keep an eye on the cons as well. If you know the drawbacks, you will be able to plan your strategy to meet these challenges.
Condition of the house: The owner is in a bad financial position and can't pay the mortgage, which means he has no money for the maintenance of the house. The house may have leaking roofs, or utility supplies may be cut off due to nonpayment of utility bills. Property tax can be due, and there may be many more issues. Moreover, they knew that foreclosing was unavoidable, so may have tried to remove the electric appliances as well.
Competition among buyers: Everyone wants low-priced properties, and in foreclosed houses, fix and flip investors are also interested. So, you may need to face good competition.
Unlawful residents: When a property is not in use for long, some illegal residents can occupy it. If you buy the property, the eviction of these people can be challenging. Although they have no right to own the place, they are usually not ready to leave it. So, you have to put an extra effort to evacuate it; it may need a good amount of money as well.
Payment of dues: As mentioned earlier, several debts are associated with foreclosed properties like taxes, unpaid utility bills, and many more. If you buy the house, you have to pay all these charges to avoid problems related to these dues. So, it's very important to check the fees and taxes related to this house before you buy it.
Lengthy paperwork: Buying a foreclosed house can be a lengthy process as a lot of paperwork is attached.
How to find a Foreclosed Condo?
The foreclosed condo can be a great investment opportunity for new investors, particularly if you have less money to invest. However, it is not easy to find such a house; if you are new in the real estate market, you can use the following ways to find a suitable foreclosed condo for sale.
Contact a real estate agent: Real estate agents have vast experience in the local market. They know details about all the houses in a neighborhood. In addition, they have a network of informers and can help find even those houses that are not even listed yet. So, a real estate agent can be your best tool to find a desirable house.
Banks: Banks have a separate section related to real estate properties or called the REO section. These sections have all the information related to foreclosed properties. You can visit the nearest branch of the bank or related section on their website.
Online forums: Property listing websites are a popular tool to find any house. Foreclosed condos are also listed there. Other than websites, now we can see different social media platforms, where information about all kinds of houses is available. You can subscribe to these pages and get updated information.
Record of local office: Foreclosed is a legal process that has a specific path. Before the bank processes a property, they send notices to the house owner. You can find these notices in the office of the concerned department. You can search through the notices and consider the notice for sale or notice for default. These notices show that the property is about to be foreclosed. You can contact the owner and make a deal before the process of foreclosure even starts.
These are just a few ways, which can help you to find a foreclosed condo. Consider the location of the condo and its condition before you get into a final deal. You have to keep in mind that you are buying it to make some money; if it has a lot of taxes and the house's condition is not good, reconsider buying it!