I am in Orange County California and learned about a Condo 6 miles from me that appears that it is listed as an after foreclosure property. It is a 3 bedrooms and a 2.5 bathrooms. A good beginner's startup property. It was built in 1989. It is listed for $299,000. I think I am ready to go for my first property. Does anyone have information on how to approach a foreclosure property for a newbie. Is there a partner out there? I do have startup capital. Please advise. Thank you.
I don't know anything about foreclosures, but what I do know are that condos typically have HOAs. So be do your homework and be careful with HOAs because they can turn a good deal into a bad one.
If the property just came on the market, it is probably overpriced. You probably need to get some comparables for that property before you make an offer.
There are a couple potential issues specifically with Condos. The first is there may be a restriction on rentals imposed by the condo(or HOA) board. Also the Condo fees can be a cash flow killer, and they won't get better as the condo ages.
In the past few years, getting a condo or townhouse financed have bee difficult. If the HOA is not current on payments, FHA financing is out of the question. If you are looking into making it a rental & not have to finance it, you can drive the asking price lower. But on the turn-around when you're ready to sell & the HOA still have issues, you might get stuck with it. Again, it all depends. I have a co-worker who sold his condo that was 2 blocks away from Disneyland. It took a couple of months until it was sold. The buyer's family was from China. It sold 10k below the asking price.
Hope that helps.
Do your homework
The answer to your "How" and "What Price" questions depend on what you plan to do with this Condo.
- Are you planning to renovate/flip the property?
- Are you planning to dress it up a bit and rent it out?
Either way, it sounds like the Bank has already foreclosed on the property and is now considered REO on the lender's books?
Your best bet regarding what to do next is to contact the Lender/Owner and learn their procedures for liquidating their REO properties. Every bank has slightly different requirements.
For example, some lenders might require that you pre-qualify with them. Bank of America had this requirement for their REO properties the last time I spoke with them, even if it didn't say it in the MLS listing. Not a dealbreaker, but definitely steps that you need to know.
REOs are almost-always sold AS-IS. Since the Lender (or Lender Representative) never occupied the property, they are exempt from some disclosures here in California. Be prepared to pay for a high-quality inspection, so you know what you're getting-into.
You need to determine your exit strategy,in other words...what do you want to do with it
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