Bargain prices in real estate are not a myth, and they have attractive ROIs as well. However, locating them in a market saturated with frantic buyers can be a challenge. Experienced agents and investors are savvy enough to determine a bargain when they see it. You just need to know where to look.
The following are some real estate options that can make bank and have a low price tag:
If a property owner reneges on mortgage payments for an extended period of time, the property is repossessed by the lender. Once the occupants are removed, it goes up for sale on the market via a listing.
These are called foreclosed properties, and are considered to be some of the best bargains in the industry. Since the property is pending purchase, its original price is reduced significantly. Banks are not as experienced in managing properties, and thus they are quick to let go of foreclosed ones for a discount to remove them from their books.
Most foreclosed properties usually require extensive repair work, and can therefore remain in the market for years. You can haggle down the price further since you will have to pay to make it livable again. Click To Tweet
Some of the best real estate deals can be found in auctions, and they might be better than foreclosed properties. There are two reasons why a home is put up for auction. Either its owner fails to pay property taxes on it or delays mortgage payments indefinitely. The starting bids for such assets are less than or equal to the remaining sum left in the mortgage.
That is not to say that auctions aren’t risky. Bids are fast paced and participants have to act quickly if they wish to remain in the running.
However, the awards are usually worth the risks involved. Research these properties as thoroughly as you can before you bid on them. This will help you decide how much you can or are willing to spend. You will need to make a cash payment but there might be some exceptions to this rule.
Each auction house has its own way of managing such events, and this includes transaction methods they prefer.
Consider Properties in Non-Traditional Locations
Properties that are located in areas that are under development have high price tags which can go higher once investors come into the picture. Properties that are located off the beaten path, such as those in the Southeast or Midwest, or in unconventional locations are cheaper in comparison.
This includes locations that host a number of distressed properties, fixer-uppers or foreclosed properties. The price may be marked down due to a lack of schools and lack of funds, but that is not to say it won’t appreciate in the future.
To determine if such properties will make good investments, investigate what the government has planned to do in those locations. If the land is to be developed later, getting a leg in with a couple of bargain properties is a good idea.
Similarly, a sudden influx of residents is a good sign that the location will do well in the future. However, make sure to determine this before making a purchase in the area, and have an exit plan in place just in case. Like any business, real estate comes with its own risks that can be tricky to manage if you don’t have the experience and market knowledge.
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