Is investing in foreclosure homes a good business to be in?
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Answer:
Do a lot of research in the area before you leap into this. Make sure you know what type of repair work needs to be done ahead of bidding for it.
If you can do a lot of it on your own, then it's okay to live there. If you can't do the work, get quotes and talk to people UP FRONT, not after the sale.
Be careful of capital gains taxes on flipping homes, if you don't know what I'm talking about then you need to do a lot more learning before you do this.
Basically it comes down to the market - timing, price, location. Better do your homework, and I don't mean on line. Buy some books and do some projects on your own before you think you can do this.
If you know what you are doing.
Yes! A very good investment! I just wish I had the money to do it! It is called FLIPPING a house but you gotta watch that you don't buy in an area where the city or government can come along and take the houses by (EMINENT DOMAIN), or declare an area, (A BLIGHTED NEIGHBORHOOD), then all your time and money will all be for nothing, one GOOD house in an area that all the other houses are terrible, won't save the neighborhood! But I will say, go for it and invest wisely!
Things sell for the price they sell for for a reason. Foreclosed houses are usually in run-down condition, and worse yet, in bad locations.
With the exception of painting that you do yourself and cheap things like planting flowers, fixing a house to sell it is usually a money loser. You're buying new and selling used.
Fix the hole in the drywall, but don't put in a new kitchen.
Also learn about appraisals. After the home is fixed up and looks all pretty you may be able to find a buyer at a much higher price. When the appraisal is done they compare your house to others in the neighborhood with similar amount of bedrooms, bathrooms, and square footage. If there are no houses similar to yours they will have to lump you in with other crappy houses in the bad neighborhood. Then the buyer won't be able to finance any more than what the appraised value came in at.
Once in a while you do catch a foreclosure in a decent section. Those are your gold mine. Learn all about the neighborhoods you're investing in.
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