Foreclosure Investing for Newbies

[Jonathan Lane]

Hello,

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?

[Chris Stroup]

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.