When a home owner defaults on their mortgage payments due to financial pressures, the bank usually takes possession of the property through foreclosure and look to auction to try and recover some of the value of the home.
When looking for rental properties, foreclosure auctions can be a great way to invest in real estate but learning which properties are good investments is important when using foreclosures.
If the owner is financially unable to come to some kind of agreement with the mortgage lender, then in order for the lender to recoup some value, the property is auctioned off.
If you're looking to earn years of investment income, foreclosed property bought at auction can yield substantial income.
Given the current downturn in the economy and the job market in a hiring freeze, there will be many opportunities to acquire property through foreclosures as homeowners caught in squeezed financial positions look to walk away from difficult financial commitments.
There will be a number of chances to invest in foreclosures and now may be a good time to look for an investment property. But as always, the trick is to be able to recognise these openings.
Despite the commercial assertions that it is easy to walk into a suitable foreclosure deal, there is a fair amount of due diligence that must be done before agreeing to a purchase at auction. Doing credible research is key if you want to be successful.
The internet has made it relatively easy to do your research by providing important details such as market value of the property.
Such information can be freely obtained from free online services but to get current real estate information, including information on foreclosures, it would be best to join a real estate member site on a monthly subscription.
You should also be aware that properties bought at foreclosure auctions tend to be little worse for wear by the time they become available.
Very few properties bought at auction can be ready to move into as soon as the auctioneer's hammer drops to complete the sale, so keep in mind any costs for renovations while you're engaged in the heated bidding process.
Rules may prohibit viewing the property prior to auction in certain areas, which makes it difficult to gauge what any renovation costs are likely to be. This is where membership to a real estate group or knowing a local realtor comes in very handy.
Having a little patience and doing your homework will inevitably net you a deal at foreclosure auctions. Investing in a list service, which provides you with data about upcoming foreclosures before they reach auction can help you to spot deals early.