3 Tips for Purchasing Repossessed Houses

Purchasing repossessed houses can be a great way to make a great return on your investment. With more and more competition out there for repossessed homes, it has become increasingly difficult to find the good deals. Here are a few tips to keep in mind if you are in the market for repossessed homes.

1. Make Money Upfront

Many new investors mistakenly believe that the money is made on the back end of the deal. If you can just sell the house for full price, you'll be alright. While you do want to sell it for full price, this is not where your primary focus should be. Experienced investors know that the money is made on the front end of the transaction. You have to find a home that is priced well below market price in order to make any money in this game. You should figure your profit in at the beginning of the transaction and know exactly how much the house is priced below market price. This will save you a lot of headaches and help you make more money.

2. Make Friends With Brokers

Most of the best deals on repossessions never hit the open market. They are not sold at auction and the majority of people don't even know about them. If you want to find the best deals, you need to befriend a few real estate brokers. Let them know what you are looking for in a house and tell them that you are ready to buy. They will keep their eyes open for you and let you know if any houses matching the description you are looking for become available. 

Many times, real estate brokers provide the really good deals to their network of clients before they are officially listed. If you have a connection like this with a few real estate brokers, you will know about the really profitable deals before anyone else. With an advantage like this, you can definitely make money in buying repossessed homes. 

3. Stay Away From Large Problems

Sometimes a house is in such bad of shape that you should not seriously consider buying. However, this does not stop some investors from trying it anyway. Problems like toxic mold, radon gas and foundation problems cost a lot of money to repair. A mold problem in particular can cost many thousands of dollars. Most of the time, you will not know the extent of the damage until the mold remediation company starts working. It can get in the walls and in the ceiling which requires a huge amount of repair. 

blog comments powered by Disqus