Real Estate Investing – Buying Foreclosures and What to Look Out For
List a property for sale at fifty percent of market value and the bargain hunters come out of the word work. Like termites in a feeding frenzy, some of the items to look out for are often unsolvable by the time they are found. Properties in foreclosure carry certain hurdles that one needs to be aware of. I mean, you would hate to be out all of your hard earned money and not have the ability to do anything with the property.
First and foremost, who is currently living in the property? What rights are they claiming to the property? Do they have an ownership claim? I personally lost twenty-thousand dollars to a tenant that claimed he owned the home from 1974. Even though he had never paid taxes, never paid rent and missed his third payment back in the start of 1975.
If you have not been through an eviction proceeding, it can get pretty nasty. Some of the people and I’m not saying your tenants are professional rent beaters. This means they have perfected the art of living in people’s houses for free. When you file for eviction they will file an injunction stopping the eviction until their facts can be presented in a court of law.
They will bring claims that repairs were not made, the house is substandard and a list of other items. What makes this such an obvious stall tactic is you are usually not looking for any money from them but simply a vacate from the premises. In other words, you are not trying to collect rent, you just want them out.
Sellers and tenants that are losing their homes generally are not in a position to repair anything that might be broken. Worse yet, they may choose to damage the house themselves. Things they might do include flooding the house, stripping the copper piping, selling the appliances or drilling holes through the roof to let the rain in.
Try to get your seller and / or tenants out as quickly and cheaply as possible. The best way I have found so far to get a house emptied is to offer them $500 – $1,000 cash in exchange for them having a moving van all packed up and the house broom swept within two weeks.
Most seminars make it all sound so easy. You go to an auction, purchase a home and post it on craigslist. Well, until those hungry buyers come beating your door down with checks in hand you need to prepare yourself for the worst case scenario. Some of the situations above happened to me personally.