Foreclosures Opening Up New Opportunities But Not Without Risks
Foreclosures are opening up new opportunities but it is not without risks. The market is flooded with 700,000 bank-repossessed houses and about another one million is in foreclosure. This is just the time for many to be tempted to dabble in distressed units.
Like every other kind of business it requires special skills and experience. It is not for the cautious but for those who are willing to take on risks. For them there are endless opportunities in this well stocked market of foreclosed units.
On the shop shelves are standing shining new luxury houses in the upbeat neighbourhoods of Nashville. The price has been slashed to half. Then again banks are giving away properties in down under Detroit localities for peanuts. The new type of business has opened the doors to teeming professionals. One such firm is the Blackstone Group. It has entered the fray with a war fund of $11 billion to gobble up foreclosed houses. Giant developers like Centex and Lennar are not far behind with a kitty of 41.5 billion as vulture funds.
Whether shopping for a house that can be a good investment for future profits or buying one in a neighbourhood that had so far been out of bounds, the bottom line is that pockets must be bulging with funds. Some properties can be turned into gold within a few months but nevertheless it is well to remember that the market continues to be sluggish. It is dominated by a fear that prices might fall further. Even though there is a good demand for rented accommodation one should be prepared to wait for at least two or three years before things actually start moving.A trip to the county assessor’s office will give a neat picture of recent sale prices per square foot. This will give an idea based on which one can deduct maintenance charges before adding on profits.
Another point to bear is that bad loans do not disappear with the borrower. Until and unless the property becomes owned by the lender, the tax liens and dues tend to be brought forward and gifted to the new buyer. Thus the buyer must make sure of the clear title and for thus legal help is required. There is no meaning in trading seats with the distressed previous owner and taking over that person’s mantle.
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