Financing Foreclosures
Author: Troy Schuricht • URL: http://www.communityfirstfinancial.comJune 19th, 2008 •
It is safe to say that real estate is hot once again. Unfortunately this new hot market is only available to professional real estate investors and very savvy borrowers. Foreclosures have become the latest and greatest in most market places. Deals on homes can be as low as fifty cents on the dollar, but most come with some form of time restraint and quick decisions need to be made.
There are number of ways to finance your fix and flip, short term hold or long term rental, and when it comes to purchasing a foreclosure it is good to know your options.
If you are buying a foreclosure that needs minimum repairs there are only really two good options, self finance or hard money. Generally the trustee sale or auction wants their money quick. Because of this conventional financing becomes nearly impossible. Depending on where you buy, there is usually just a few days to deliver a check for the full amount on your foreclosure. This is where hard money or private money is best utilized. It can be difficult to find these lenders, but if you work with the right Realtor they should be able to give you a couple of names. And please call at least two different hard money lenders to compare COST, interest rate and terms.
If you have a foreclosure that need major repairs there are a number of options to look at. If you can determined the scale of repairs most hard money lenders will lend you the money to include the cost of the repairs. Depending on the situation, one may be able to use conventional financing and cash out on the property to make the property more attractive for a renter or long term hold. Generally refinancing any foreclosure out of hard money should mean that you intend to hold the property 6-12 months or more. The cost of refinancing can out way the benefits, so pay close attentions to the closing cost.
Get in Foreclosure Shape:
- Know how your local foreclosure process works.
- Know the Realtors, wholesalers and hard money lender that work with foreclosures every day.
- Line up Financing – both hard money and conventional.
- Try to buy a foreclosure in an area you know.
- Know the rental market ahead of time, prepare for worst case.
Do not be afraid to invest in real estate during one of the lowest price points of the last 10 years. There are a number of deals out there, but time is not on your side when you’re buying foreclosures.
Troy Schuricht
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Tags: buying foreclosure, Financing Real Estate, foreclosure, hard money, hard money lender, hard money loan, HML, real estate investing, real estate investor, rehab
Joshua Dorkin
Charles Feldman
Ted Karsch.
Troy Schuricht
Anwell Tsai
Richard Warren
Jim Watkins
This is a good post the writer makes several great points.
Foreclosure investments can be lucrative but, they are not for “new” investors or the faint of heart. You really need to be a seasoned traditional investor before you attempt Pre-foreclosure or auction foreclosure investing because the decisions are made quickly usually with limited information. If you are starting to invest in foreclosures it would be best to start with “foreclosures.”
If you are not aware that there are three ways/types of foreclosures to purchase then I would begin to research foreclosure, pre-foreclosure and auction sale foreclosures.
A lot of the psychological well being of the American public comes from how well they’ve done with their house over the years. If indeed there’s been a bubble, and it’s pricked at some point, the net effect on Berkshire might well be positive [because the company’s financial strength would allow it to buy real-estate-related businesses at bargain price
Foreclosure real estate investing can bring lucrative to profits to those with knowledge of the foreclosure process. Short sales, foreclosure auctions, and purchasing REO properties offer great potential as investment properties. I found this website very informative on real estate investing.
http://www.simonvolkov.com/foreclosure-process.html
Troy,
Your right on the money, this is the best time to buy real estate, and I’ve been telling many of my Commercial Real Estate investors the same thing, and not to wait until the real estate market prices start to rise again. “BUY LOW & SELL HIGH” that’s how you make a profit! For instance, my Commercial Real Estate investors have had financing problems like many others because of the Subprime lending industry that kept them from buying, but I informed them like many others to keep in mind there are other alternative Real Estate financing options, eg. Real Estate Investment Trust(REITs); Bond Offerings; Real Estate Hedge Funds; and Private Hard Money Investors that can finance deals that banks and traditional lenders won’t in this present market.
PS,
Joe