Interesting residential foreclosure play
Wednesday, January 23rd, 2008There is a lot of hype swirling around foreclosures…gurus who imply there is easy money to be made by buying foreclosures.
The most conservative play is to bid on REO (”real estate owned” by the bank) try to get a discount, spruce up and sell. Banks have gotten smarter about their REO and now almost always use agents to market the property widely (where they used to quietly sell the properties to investors they were tight with).
Or you can buy at foreclosure auction which means rolling the dice even more - buying a house without ever seeing inside it.
Whatever method, the truth is you will have to kiss a lot of frogs and weed through lots of market priced houses to find a a great deal. I did well with my first foray into this approach years ago, buying a condo in Washington DC owned by the US Department of Housing and Urban Development (HUD). They post their homes on their website; they contract with a real estate agent that is supposed to list the homes on the multiple list as well. The agent dropped the ball and failed to post my condo; I found it on the web and was probably the only bidder. HUD home bidding is initially open only to owner-occupants so what’s left for investors is somewhat picked-over. If you’re prepared to live in an investment house for a year you might find something interesting.
More interesting to me are homes owned by the Veterans Administration. Ocwen disposes of the homes and the VA offers very attractive investor financing - 0% down for vets and 5% down for everyone else, plus some fees. It’s hard to get so much leverage on investment property anywhere else, especially in this lending climate. check it out.
