Real Estate Innovation

Bank Owned Property Your First Investment Property

Bank owned property can be a treasure-trove for investors. The American mortgage industry is inundated with foreclosure’s, with no relief in site. With the rising cost of fuel spurring price hikes in just about everything you can think of, and the credit card companies doubling their minimum payments family’s that were teetering on the financial edge are now plummeting into ruin.

This is a very serious problem for the mortgage lenders as well as the property owner. The lender want’s to regain the money tied-up in the property. The home owner has bill’s piling up, they are missing payments and praying for a miracle before they hit rock bottom and lose everything.

So what does purchasing your first home and bank owned property have in common. For most of us when we hear about foreclosure, we are not thinking about the investment potential. What strikes my mind is the monumental opportunity some lucky investor will have by taking the time to structure a deal that makes it possible for the bank to get the property off their books, and for you the investor to make a hearty profit.

Any property that is a bank owned property can be called an REO. “real estate owned”. All banks want to recoup as much of the money they put into the property as they can and still get it off their books as fast as market conditions allow. Often a bank owned property can be priced 5-30% below current market value. Dealing with a bank on your own can prove difficult,that is why the services of a real estate agent with experience buying bank foreclosure properties is something you should seriously consider before approaching a bank with your offer.

Besides the price and availability of bank owned properties, they also make owning a home more affordable. The prices for homes have fallen, yet still remains out of reach. You may need a single family home, but cannot find one that fits your pocket. Foreclosures are basically bad news for some and good news for others. For the savvy investor, these are the days when investment properties are not only abundant, but priced to sell.

Don’t underestimate the cost of repairs. You should get estimates from a couple of well established contractors. Don’t forget that repairs on a home will take time. If your plan is to sell the house, factor in the time it will take to fix it up. Remember contractors are notorious for not staying on schedule. Try to find a reliable contractor that you like to work with, by using the same contractor on many different properties you will find they understand what your trying to do and the work will go much smoother.

If your pre approved for a mortgage loan, especially with the bank your attempting to buy the home from then the process will go much smoother and faster. Remember banks are in the money lending business, so they want to quickly get back the money owed them for the property, so they can go on to make other loans with it and earn interest payments.

Creative financing is nothing new and with the price of everything going up all the time the average person has become very creative in structuring their finances and that in a nut shell is the heart of foreclosure investing. You need to think about the financing of the bank owned property in a different way, you need to set up the financing in such a way that it not only pays for itself, but churn’s out a healthy profit for you.