|
Pre-foreclosures - Locating the Ideal Neighborhood to Buy a Home |
 |
 |
 |
|
Written by Debbie Newman
|
|
Thursday, 08 January 2009 03:18 |
|
In this current real estate crisis, many people are loosing their homes either because they can't make the payments or are walking away because their house is worth less then the amount owed. It was reported by CNBC on July 24 that foreclosures now represent half of all the homes sold in the US. Although this is downright scary to a highly leveraged homeowner or speculator this is also an opportunity of a lifetime for anyone looking to buy real estate at these depressed prices.
by DebbieNewman
In this current real estate crisis, many people are loosing their homes either because they can't make the payments or are walking away because their house is worth less then the amount owed. It was reported by CNBC on July 24 that foreclosures now represent half of all the homes sold in the US. Although this is downright scary to a highly leveraged homeowner or speculator this is also an opportunity of a lifetime for anyone looking to buy real estate at these depressed prices.
If you look at any successful real estate investor, they have accumulated much of their wealth by buying when there was a downturn in the market. Donald Trump is a good example of someone who was buying up real estate real when everyone else was selling as illustrated in the quote. "When I first started out in Manhattan, everyone was saying what a terrible market it was, and if I'd listened to them, I would not be where I am today. There are always opportunities." Donald Trump.
Many of the top real estate investors, including Mr. Trump, now feel that this is currently a good time to invest in real estate by purchasing pre-foreclosed or foreclosed properties.
The main reason is unlike foreclosures, a pre-foreclosure is made privately between the owner and buyer and therefore avoids the bank auction foreclosure process. This provides many advantages to the buyer including more time to inspect the inside of the house and a better chance to establish a mortgage with a bank.
When looking to purchase a pre-foreclosure you also need to pay closer attention to the macro aspects (I'll cover micro aspects in a later article) of the property in order to limit your risk as much as possible. Some of these property macro aspects are:
- Look around the neighborhood to see how many homes are being foreclosed. It's best that the house you're considering for purchase is the only one facing foreclosure. Obviously the more homes in forced sale, the more likely the properties will depreciate.
- Ask around to find out what the average rate for rent is in the neighborhood and if it has changed lately. This will indicate if local housing demand is on the rise or not.
- What is the employment rate in the area? If declining then that may indicate that it's not the right area in which to invest. Does the local economy appear to be stable?
- Contact the local government to find out about any upcoming infrastructure plans. Plans such as new building permits, train lines, shopping centers and corporations establishing a local presence, would be a good indication of community growth.
- Consider the age of the majority of the population within the community. If the majority of the local population is seniors that own homes, that could translate into an excess of future housing as they move into elderly care facilities.
If these macro aspects all work out in your favor, and if the inspection of the house goes well, then chances are it's a great opportunity for you to buy that pre-foreclosed home. When it comes to making a mint in real estate it's all about timing and location.
|
Business Articles 
