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.