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HUD gives preference to live-in owners. When a house first goes on the market, investors are not allowed to bid. The houses are on the market for five days till bid date. After that, if they are not sold, they go on "daily" bidding. After another five days, they are offered to "all bidders" and an investor can bid on them on the eleventh day. If you look at the HUD list you will see the ones that are marked "daily" and the ones marked "all bidders". On the VA foreclosures, VA also gives preference to live-in owners. But, they will offer financing to investors on some of their properties. Their interest rate is very reasonable. An investor gets the same rate as a live-in owner. They require 10% down from investors. On some of the bank owned foreclosures, they do not care if you are buying to occupy or as an investment. There are sometimes exceptionally good buys in the regular MLS, but these houses tend to sell very fast. So, if you are serious about buying foreclosures an investments, the first thing to do is line up your financing. There are many lenders who will make loans for people buying as an investment, but you can expect the interest rate to be higher than the homeowner rate, and the down payment to be at least 10%. I can send you a list of lenders who will do investor mortgages or short term loans. If you really want to buy foreclosures as an investment, these are the steps you need to take: STEP ONE: Because finding the financing is the key to being able to purchase good deals when they come up, you will want to start early and shop carefully for rates. Finding financing for an investment property is not as easy as finding financing for a home. STEP TWO: The next thing to do is to decide what you are trying to accomplish. Do you plan to buy houses and fix them up and resell them, or do you plan to buy houses, fix them up and keep them as rentals? Are you more comfortable with single family homes, duplexes, or townhouses? STEP THREE: You have to decide how much or a project you want to get into. Are you looking for houses that just need cosmetic repair - carpet, paint? Or, are you willing to tackle projects with more major repairs - such as roofs and foundations? You will want to become familiar with the cost of making these repairs. Are you planning on doing some of the work yourself or hiring it done? If you are planning on doing the work yourself, you will need to check the cost of paint, carpeting, etc. If you are planning on hiring contractors, you will need to find out who you can get, and what they charge. STEP FOUR: You need to decide exactly how many dollars you want to spend on your investment. You need to decided what kind of a return you need to get out of it. Fore instance, say you want to buy a $50,000 house with $5,000 down. And say you want to keep the repairs under $5,000. Perhaps you want this house to be worth at least $75,000 when you are done with it. What ever your objective is, you need to be clear about it. You need to sit down with pencil and paper and work with your figures. When you make a goal - stick with it. Don't be tempted to buy a house that doesn't meet those goals. But, on the other hand, be realistic about what you can make. STEP FIVE: You need to decide what neighborhoods you want your investment in. You will probably want to concentrate on areas that are somewhat handy to where you live. STEP SIX: You need to start looking at houses to become familiar with values. If you have any questions, or would like a list of lenders who make mortgages to investors, or would like a list or properties to look at that match your criteria, please email me. |
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