I have a question! Foreclosure- good or bad route to invest in for a rental property as a newbie? What are the upsides and downside of foreclosures?
The short answer is "it depends"
. If you can acquire the property for the right price.
. If there are tenants already in the property and the length of their remaining lease
. If you have to go through a lengthy court process to forclose
. The condition of the property
. If it has had any issues that make it almost impossible to rent (asbestos,mold,meth house)
. And many many other issues ......................
In Fayetteville, NC we normally have a lot of good foreclosure deals. The BRRRR strategy works really well for these. Purchase the property with cash or a business line of credit and then once renovations are complete you can finance all or part of your money out with a 30-year mortgage. You need to find a local lender and work out the details before you purchase the property though. Normally they want the closing disclosure to be structured a certain way to be able to include renovation costs and everything in the new loan.
Be careful with foreclosures. Make sure to do a title search before you purchase the property. There can be liens on the property that will convey with it. Meaning that you would be responsible for those once it is yours.
I recommend linking up with someone in your area that deals with foreclosures and seeking their guidance.
@Chris Stroup thanks for that information. I will look into it. I have no clue how the foreclosed property process work. I have heard the BRRRR technique quite a bit... so I will be looking into that and will reach out if I have more questions.... which I know I good for.
Thanks, I will take some of those steps and go from there. Any more guidance on this process is always appreciated.
@Jonathan Lane the courthouse foreclosure process is different in every state. Try and find an investor-friendly real estate agent in your area. Some of them will be able to help you through the process. You could always go to the courthouse in your county and start asking questions.