Are Foreclosed Homes in Colorado Good Rental Investment Vehicles?
To be a successful investor in the housing market, you must stay ahead of the curve in real estate trends. With a market that is constantly ebbing and flowing, good investors keep their eyes open to all possibilities. They see opportunity where others see neglect. This is especially true with the foreclosure market.
Though it’s not only investors, but also first time home buyers who see opportunity in derelict [need new word?] properties. It turns out that the two are not so far apart in terms of their real estate goals. There is good reason that both are looking increasingly to foreclosed homes as promising real estate opportunities. While investors are profit-driven, many first time home buyers want to protect themselves from a wildly fluctuating market, in which they could lose money. The solution is to purchase a property that is considerably below market value, such as a foreclosed home.
One of the places that this trend is emerging is Colorado—a state that has become a foreclosure hotspot in recent years. For investors, the rise in rents has helped to drive this trend. Many now consider foreclosed properties in Colorado great vehicles for monthly income generation and a means to immediate returns on their investment. With rental income much higher than it has been traditionally, they can more than subsidize their mortgage payments. This creates a scenario in which the investor is in the green, covering taxes and insurance and allowing for additional savings with rental income.
Additionally, since these properties are available at a rate much below the market price, investors can potentially make a sizable profit once the market rebounds and they sell their investment. Of course, it is important to remember that investing in a foreclosed home is worthwhile only if the buyer can find the right tenant. Because renting the house to the wrong person can prove disastrous. However, if the buyer finds the right tenant, the benefits of investing in a foreclosed home are numerous.
The rise in rents influences first time home buyers in an opposite manner. When comparing the economic advantages and disadvantages of renting versus buying, the numbers show that in many markets, such as Colorado, it makes more fiscal sense to buy a foreclosed property. It is not uncommon for the monthly mortgage payment on these properties to be less than a monthly rental amount in a comparable property. Not only are these homes below market value but also there is a large selection of them. A first time home buyer can readily find highly affordable REO (real estate owned) properties in and around Colorado.
Another advantage to purchasing a foreclosed home in Colorado is that it can be bought with a minimal down payment. Eager to find a buyer, some banks and lenders will offer loans with little or even no down payment. Whatever the amount, it is considered to be the capital for appreciation on the property.
The benefits to purchasing a foreclosure property in and around Colorado are clear. Now all that is needed is for buyers to find the listings and narrow down the properties to ones they are interested in buying. Once this has been done, they need the expertise of real estate agents experienced in the foreclosure market to help complete the formalities involved in the purchase.
In the end, what all Colorado residents can hope for is that the reselling of foreclosed properties will be great for the stabilization of the housing market.
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