Have you heard the term, “Buy Low, Sell High”?
You may have heard it in the stock market world… and when anyone’s ever suggested that to me, I’ve laughed in their face.
It’s such an obvious piece of advice that isn’t really all that possible without a crystal ball or luck.
But this profit secret that the real estate tycoons are using does just that… with property.
That’s right, they’re buying low and selling high in the real estate market.
Here’s how…
You’ve probably heard me go on and on about the upsides of real estate investing, but for today’s purpose, we’ll be talking about a little-discussed niche of the real estate investment industry: foreclosures.
If that word strikes fear in your stomach and you want to stop reading right now, I completely understand.
But I urge you to bear with me, because while I understand foreclosures often set off many investors’ risk alarm bells, I’m going to break everything down for you and show you just how profitable they can be.
I’ll even give you a list of top tips for assessing the risk versus reward of foreclosures, but first let’s discuss the benefits of buying a foreclosed investment property.
This applies to buying a foreclosed property in general, but for us as investors, we’ll be looking at foreclosed properties for the purpose of turning around and selling them or renting them out.
The first benefit we’ll discuss is obvious the potential for a fantastic deal.
Banks are usually very motivated to get these foreclosed homes sold as quickly as possible, so they’re far more likely to negotiate everything from price and down payment, to closing costs and length of escrow, etc.
Banks have no such emotional connection to foreclosures, so buying a house from the bank will rely on only the economic factors, and thus making the negotiating easier.
Additional benefits include a clear title, and you won’t have to take on any liens, mortgage payments, or back taxes of the previous owner.
When you’re purchasing a property as an investment, avoiding those additional headaches can be a great bonus.
As I mentioned earlier, banks want to get foreclosures off their hands as quickly as possible, so they’ll price homes low in the hopes of receiving multiple offers.
Purchasing a foreclosure sets you up perfectly to buy low and sell or rent high, guaranteeing the greatest return on your investment.
In fact, foreclosed homes sell, on average, for 18% to 59% less than non-foreclosed properties in the same neighborhood!
Starting off at that lower entry price means your profits will be even greater once you sell or rent the property.
That’s why the real estate tycoons love foreclosures.
Considering that 15% is generally considered a good ROI (return on investment) for real estate investing, starting off at a much-decreased price point gets you way above those “good” returns.
The stigma that foreclosures are dilapidated and rundown and require extensive remodeling knowledge on top of requiring a huge pile of cash to pay for renovations deters many investors.
The reality is that while, yes, those rundown foreclosures do exist, it is possible to find stunning properties in the best neighborhood for a rock-bottom price as a foreclosure.
A foreclosed property just means the previous owners defaulted on their payments, and while that may sometimes reflect in the property itself, it’s by no means the norm!
So, if you’ve been considering getting into real estate investing, maybe check out some foreclosed homes now that you know all the great benefits!
I’m sure with the billions the real estate tycoons are raking in, they won’t mind us using this secret under the radar to reap some of that wealth.
