 |
Search the San Diego MLS(includes all areas in San Diego County)
April 02, 2009
Rampant Foreclosures Lead to Investment Opportunity
Even as the government steps in with measures to prevent foreclosures, February saw more than 290,000 new foreclosures filed, the 3rd highest one-month total since RealtyTrac began tracking the number in 2005. The data includes auction sales, bank repos and default notices. During the last 3 years, there have been more than 4 million foreclosures in the US. Investors seeking to build equity have always been attracted to foreclosed-on properties. Such property can usually be acquired for 20 to 60% off of market value. Experts say that investors looking to buy properties, spruce them up and re-sell them will be hard pressed to turn a profit. Those investors with the ability to sit on the properties, whether renting them or holding out until the market improves, should be very excited about the opportunities available today. A good investment strategy is to acquire properties in areas where prices are very low, yet demand for rental properties remains high.
|
RealtyTrac reports the highest foreclosure rates in California, Arizona, and Nevada. Meanwhile, the highest number of foreclosures are occurring in Sunbelt cities like Las Vegas, NV, Cape Coral-Ft. Myers, FL, and Stockton, CA. The buying of foreclosed properties can be risky. Without proper research, investors could end up acquiring properties with outstanding tax liens which would then become their responsibility. Experts recommend investors be diligent in their pre-purchase research. Investors should pay a contractor to inspect homes for costly issues like structural damage or mold. They should also carefully estimate the amount of money they will have to spend renovating the property. Lastly, local real estate agents should be consulted to determine how much similar houses sell for in the area. Another key fact to find out is how long properties typically sit on the market before selling.
While it sounds bad for investors to profit from the misfortune of others, when they remove distressed properties from the market, investors are doing more than just building a portfolio. As the total inventory of unsold homes drops, the real estate market will begin to stabilize, providing a much-needed boost to the ailing national economy.
|
