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This is just my opinion, but with the rising foreclosures rates, which went up 4% last month, leaves real estate investors in a great position to buy these homes.

On the average, acording the a recent news article i saw on cspan, when a house is forclosed on the banks will usually sell the for well under the market value.
Now, to explain why banks practice the art of selling these foreclosed homes cheap.
I am working on a masters in Busiess/Accounting/IT so I will try to explain this off the top of my head here as i have studied this in My accounting classes.

Whe a bank owns a foreclosed property it becomes a tax liability, which means when tax time rolls around the banks have to pay taxes on every foreclosed property they may have on there books. Not to mention property taxes twice each year on the same property.
Banks are eager to sell them cheap to get them off there books fast. Once the bank sells one of its foreclosure properties it then becomes a tax write off. In other words the bank will file a foreclosed property as a loss and take the difference between what it sold for and what they actually sold it for as a business loss on taxes, they get a percentage of that differnce on taxes.

That is why foreclosures are so cheap, it is easier for the banks to sell cheap and use the tax system to recover their losses then it is to hold onto a foreclosure property and try to sell it for FMV.

But, as they saying goes "one mans loss is another mans fortune." so this puts the RE investors in a great position to buy these homes. I have found that the fastest way to make money on foreclosures is to fix and sell them, NO this is not "Flipping" I will discuss flipping in my next post. This is just buying and reselling nothing more. I have also seen a lot of people pass on a foreclosure just because other houses in that area are not selling for a decent value. That does not mean that you can not get a decent price out of the one you may be looking at. It only means that there is a limit in that particular area that people will pay for a home. This means you want to put some money in rehabbing this property to get as close to a specific cap price as you can. I have seen houses sell for 10 to 15k more than other houses in the same area after rehabbing. WHY? well it is simple you just put some money in rehabbing a property and now your property is worth more than the neighbors.

SO you have do your home work and find out what the cap price is in that area. You can get this info from an RE agent just call or ask the agent selling the house for a comp list of the area that the house is in. I always get a comp list

I started RE investing 10 years ago but at that time it was harder to make money in my area cause no one was selling and if they were selling the wanted what the house was appraised for. And I was also busy with the military and not home to actively participate in RE investing.

Now that I am retired and home I found that an explosion of foreclosures in my area while i was gone has left empty homes setting every where. And these house can all be bought for 35k or less. Some need work, some dont. This foreclosure rate still going up has got a lot of people scared and selling before they become a statistic also. It has also got a lot of RE landlords in the area "Getting out of the market" I know of one RE investor that had 42 properties and lost them all because he was to stubborn to sell.

This does not mean that homes are not selling in my area. People are still buying homes in my area. It just means I am in a "buyers market" in my area. But i have talked with RE agents and they all say there has been no decline in buying if anything buying is up.

Hope this helps a few out there understand more bout foreclosures.

Great post. welcome home. I'm a old vet (Viet Nam) too. there seems to be a matter of symantics here, what is the difference between "just buying and selling" and flipping? Also where can one find foreclosures without having to pay those who are in the business of sell foreclosure lists?


Steve
SEMPER FI

First and foremost - thank you both for your service!

Yup Yup....foreclosures everywhere! Great time to cash in on them!

"Flipping" is basically buying, fixing up and reselling for profit. Just buying and re-selling is just that....you don't do anything with it. Buy it, close the deal - stick a sign in the yard for higher than what you paid for it!

My problem here in our area is....all the foreclosures and so completely trashed and or infested with mold, pests or terrible structural problems that we don't even want to go look at them! At least when buying a gov't foreclosure is that they have to be inspected & all the disclosures listed - so you know what's wrong with it ahead of time!

Here's a good place to have a look:

http://www.govsales.gov/HTML/INDEX.HTM