For quite some time many people have thought purchasing a foreclosure bargain was a good to earn profit with a low investment. There are dozens of infomercials, books and real estate “programs” all catering to those who want to dabble in the foreclosure investment game, but the strategy is not as easy as all the so-called experts say.
It is true that there are plenty of foreclosures on the market. The real estate bubble created by risky mortgages has burst, leaving a slew of foreclosed properties around the nation. Mortgage rates are at an all-time low and it is truly the first buyer’s market of the new millennium. By learning the truth and dispelling the foreclosure investment myths, you can take advantage of the market wisely.
Foreclosure Investment Myth #1: Making money in foreclosures is easy
Nothing could be further from the truth. The competitive nature of purchasing and securing a great deal on a foreclosure, is no simple task. After that you have to make all the repairs necessary, since some foreclosed homes can be left in disrepair. The investment requires a lot of time and effort.
Foreclosure Investment Myth #2: Buying a foreclosed property will allow me to pay pennies on the dollar for the home of my dreams
There are some savings involved in foreclosure purchases, but not to the extent many investors fantasize about.
Many foreclosed properties sell for anywhere from 5%-40% under the current real estate market value with the bulk of the properties selling at only a 5% discount.
Foreclosure Investment Myth #3: Buying a foreclosure is fast as people are desperate to move quickly
Depending on what stage of the game you try to purchase your foreclosed investment property, the process can take anywhere from 3 months to over a year.
If you do end up purchasing a foreclosure for investment purposes, there is money to be made in the long run as far as value appreciation and event profit from using the property as a rental. Make sure to know the truths behind the foreclosure investment myths before deciding on your fate.