Pros & Cons to Buying in a High Foreclosure Area (Part 2)
Our last post covered the positives to buying in a high foreclosure area. They include everything from purchasing properties at a steep discount to realizing quick equity gains to helping support and regrow the local community. This post will highlight some of the risks involved.
The Negatives
Be Ready for Competition
The fact that these homes sell for such low prices means that there is usually intense competition when it comes to buying them. Experts say that if you find a home you are really serious about buying, you should act fast; low priced foreclosure properties usually sell quickly or a bidding war will begin.
Learn about the Neighborhood
Unfortunately high-foreclosure areas tend to mean higher crime rates; you need to be aware of this from the start. Do your part to learn as much about the current neighborhood as you can. You should seriously research this and decide if a foreclosure is still the right investment for you.
It can be Costly
Due to the fact that foreclosure is often a messy process many owners trash the property prior to moving out; the cost of cleaning this up falls on you. Additionally, if they are refusing to move out, the costs associated with eviction could fall to you as well so be prepared for this. Often times these homes sit empty for some time and can require a lot of work and repairs to become livable – you have to be prepared for this. Don’t forget to do a title search and learn about liens as well as these will now be your responsibility too. If these are things you just don’t want to deal with, foreclosure homes may not be for you.
Time Moves Slowly
Even if you make major improvements to a home the value of it may increase very slowly due to the area or the homes around it. If this is something you don’t want to wait on, then consider a different real estate investment strategy.
You should always remember that buying any home is a time consuming process fraught with many moving parts and mountains of paperwork. When it comes to buying a home in a high foreclosure area it is even more important that you completely understand what you are getting into. Be prepared for this and be ready for whatever comes your way by doing your research and making sure that buying in a high-foreclosure area is the right choice for you.