Foreclosed Homes: Great Rental Investment Vehicles?
Sales of foreclosed homes continue to exhibit strength, as shown in the latest quarterly foreclosure sales report provided by RealtyTrac, a publisher of data on foreclosure, auction and bank-owned homes for investors and homebuyers. According to the report, “Nationwide sales of homes in some stage of foreclosure or bank-owned status in the second quarter of this year accounted for 31% of all residential sales.” While this trend can be attributed to the fall in home prices, it is beyond doubt that home buyers and investors are increasingly looking at foreclosed homes as a great rental investment vehicle.
With the rise in rental prices, more and more investors are now investing money into foreclosed properties and getting immediate returns through rental income. Real estate experts also believe that return on rentals now proves to be much better than other investments. There are many places across the country where investors can find affordable REO foreclosure properties and rent them out to generate positive cash flow.
In the past, investors were able to subsidize their monthly mortgage payments with the rent amount they collected, and they considered the capital price appreciation they got on the property as a major part of the payoff. Today, most investors are able to get great deals on foreclosed homes, many paying in cash. As a result, the rental income covers the mortgage payment, taxes, and insurance, as well as providing for additional savings. This is the reason why most investors are looking at foreclosed properties as vehicles for monthly income generation.
This trend is not only benefitting real estate investors, but it is also believed to be helping in the stabilization of the housing market. However, not all foreclosed properties make for a great investment. Here are some things to keep in mind:
- Investing in foreclosed homes is for sure a great idea, provided investors can find the right tenants. If so, then investing in a foreclosure and renting it out sure is a great way to make money.
- Before purchasing a property, it is important for investors to make sure that they are ready to handle the possibility of evicting non-paying tenants. Moreover, the owner will be responsible for the upkeep of the property, regardless of how the tenants maintain it.
- Investors also should assess their financial goals when purchasing a foreclosed property. This is important to ensure that the investment gives returns as expected.
Purchasing a foreclosed home is undoubtedly a great investment in the current economy. With foreclosures available at attractive bargain prices, they present a great opportunity for investors, especially if they have the means to make some repairs and renovations.
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