As per the RealtyTrac which is an Encin in California, there are approximately 1 million homes that are in the process of a foreclosure and approximately 700,000 homes which are there for sale and which are owned by the bank. But it is always not a good idea to buy a property which is in foreclosure. It is meant for only those investors who are ready to take a certain degree of risk by buying such a property.
The opportunity could be a great luxury home in the community of
There are some skilled people who are entering this kind of work and an example is the Blackstone Group which is into private equity on a large scale basis, has hoisted a sum of $11 billion to go behind such troubled properties. Builder such as Centex and Lennar, are looking for such options and they have arranged a sum of $1.5 billion to vulture funds for somewhere in the range of 20 to 40 cents on a dollar between the time period of December 2007 and April 2008. This shows that in case any individual plans to buy or rent a home in such an area which under conditions will not be affordable, and then he would also require lots of money to be able to do this.
Condition of the market on an overall basis is not very encouraging, but some properties can be changed in a span of some months. Therefore, you should be prepared for a downward trend in the market for the coming 2-3 years, even if there is someone ready to come for rent or if you have arranged the 10% to 20% of the amount that will be required for the down payment.
When you plan to sell your house, the best option is to go through the sales that have taken place in the recent past and check the price of per square foot from the records in the office of the county assessor. It will be better if you go about the whole process in the traditional manner. Before giving the house for rent, calculate the rate of capitalization and take out a little over 10% of what you expect to get in a year, for the purpose of depreciation and maintenance.
The best way to get good profit from a foreclosure is when you purchase the home. More profit can be expected when you sell the house in a market that is going down. For example, you buy the house for 50 cents on the dollar and sell it back for 70 cents on the dollar. There are some areas which are suffering from a high number of foreclosures and the backs are suffering so much that they are giving the properties away on prices much lower than the original.
But the important thing is to be sure that the investment you make is right. It should be fine even when you do not resell the property for the coming 2 to 3 years and the market goes down by 10% to 20 %.
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