Foreclosure in real estate is a lawful process in which a lender attempts to recover the loan balance from the borrower who stopped making the payment by selling the real estate property or asset.
Most real estate professionals take advantage of foreclosed properties by means of foreclosure investment, which is a process of investing capital in the public sale of the foreclosed property. Anyone can bid for the property.
Investing in foreclosed properties, also called as real-estate owned or REO, is rising in the recent years as newest trends in the field of real estate with many homes, offices, shops, etc. being sold everyday. This trend will continue to rise because of the ongoing real estate boom and that many people are now buying for less-expensive homes.
Some REO’s are weak and old, with some of them in bad condition before they are sold. Real estate professionals invest some capital in REOs, fix them, and sell them.
Most consumers buy REO assets from bank. Real estate professionals also specialize in REO sales and whether the properties are brought from the bank, most real estate professionals have the REO listings.
The first thing to do in investing in foreclosed property is having right investment money. The person should also have patience that such investments demand.
Do a market research.Every investor needs to understand the market and do not suddenly invest in the foreclosed property. Some investors spend a lot of time searching for lucrative foreclosed properties in different mediums but suddenly, the property becomes unproductive. Every decision should be given a second thought.
Choose a better location. Buy properties which are in your neighborhood or in the area close to you. And there are good properties in the provinces too. Do not limit search to Metro Manila.
Fix the property. Sometimes it is better not to fix dilapidated sections like broken windows. Just remove them altogether, but do simple retouching afterwards. The cost to replace is avoided thus setting a lower selling price, and the buyer will have the liberty to decide on the type of replacement.
Don’t make the renovation very sophisticated. An attractive property can make a seller change his/her mind. Distressed properties usually sell at much lower-than-market price. Look for properties with wide frontage, which can be subdivided into smaller lot-sizes.
Avoid being trapped in a foreclosure investment scams. Some investments, like the get-rich-soon method, may influence you and you will get trapped in their scam web. Be careful with other fake foreclosure companies who are waiting for their prey.
Because of these scams, you will get to pay large sums of money but acquiring an illegal property, or even a defected one. Or you can manage to own a foreclosed property but you are forced to pay exorbitantly.
If you happened to come across a cheap property, inquire about it thoroughly and don’t even be attracted to a websites that promises to make you a millionaire because they are just planning to rip you off up to your last centavo.
So be attentive and be on alert in every investment you are trying to invest by keeping your eyes and ears opened. The secret of attaining a good foreclosure property lies in safe investment.
Since the banks are reputable public institutions, their REO properties are the safest and risk-free options for investors.The same thing also applies to a reputable real estate or reseller companies.
During the Philippine Real Estate Festival held recently, Mr. Noli Alleje, known in the real estate circles as “El Subastahero”, said that bank-acquired properties are zero-risk. Strict due diligence is exercised before banks will accept a property as collateral.
The bank itself can finance the foreclosed property for you by providing a lower interest rate. The bank is also a must for those who are first timers in foreclosure investments.
For those who are more seasoned foreclosure investors, there are few more options for you. Aside from banks, you can go directly to the auctions right away. But remember, you need to use your experience in real estate markets and thorough considerations of the foreclosure investment bids. And also, you should be sure you have the right amount of money to invest even if you haven’t seen the property in the auction.
Should you hold, sell, or lease the property. After you purchased the property, think of ways what you will do with it- hold, sell, or lease. You can take a look at these variables in order to help you decide: inflation, interest rates, flow of funds into real estate, in and out migration of people, job growth, and the path of progress.
But the most better way is acquiring the property right before the owner will lose it. You can directly negotiate with the owner without a third party and both of you will benefit from this.
In conclusion, investing in a foreclosed property is not a walk-in-the-park. You need to have a lot of experience and to better understand the real estate market and procedure in investing a foreclosed property.
With sources from: Mr. Noli Alleje www.investmentpaths.com www.ehow.com
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