Building Your Foreclosure Portfolio
The current real estate environment is ripe with potential issues that must be taken into consideration. Local real estate prices, mortgage worthiness and local economic and employment conditions are only some of the variables that an investor in foreclosures must take into account. If someone is just beginning to invest in foreclosures to build their real estate portfolio, it is important to understand that decisions made now can and will affect financial flexibility later.
Before Buying A Foreclosure…
Questions that buyers must ask themselves (and answer) are:
- What are your short-term real estate investing goals (i.e., how many foreclosure homes the first year)?
- What are your revenue generation goals for buying foreclosure properties? Breaking even is not a goal that is called a mistake and should not be repeated.
- Am I willing to be a landlord? If no, collect stamps or buy lotto tickets.
- What is my credit like? If you need to improve your credit, start now!
- How much cash am I working with? If none, study Hard money
- What are long-term real estate investing goals? Don’t fire without aiming.
Be sure to ask yourself these questions before beginning your real estate investing and foreclosure portfolio. If you already have investment properties, you should still ask yourself these questions. Write your answers down and refer to this list before making any decisions with regard to purchasing your next foreclosure home. Do not be afraid to reassess your goals to be sure that your current actions are still on track with your long-term real estate investing goals.
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I appreciate this article. I wish I had the stomach to be a landlord. Would it be a problem if I used some sort of property management company to handle the rental?
Property managers are an easy way to get the best results but you need to put the expense into the equation.
We are just starting to enter the business and this article was very helpful. If nothing else, it helped me to reassure myself of what are goals are and that they are properly aligned. How did you actually get started. Seems every house we call on has already been sold…within minutes of receiving notification. We just can’t seem to be the first ones on the mark!
Real estate investment is like a rolling train. By that I mean that you can’t wait until the train goes by to reach out and catch it. You have to be running along side at the same pace. In other words and what I am trying to say is that you have to commit to stay up with the market and keep that pace going so that you are able to make a decision in an instant. That is tough and takes time. Keeping up with foreclosures coming on the market was my life. Every day I knew what was new. I kept a file on every house so that if the deal fell apart I already had my research done. I contacted several real estate agents and let them all know that I was buying and that I had “REASONABLE” expectations. I also had my financing worked out well in advance. Hard money is key or cash if you have it. Don’t worry about the train that passes and look back at the track at the train/home that is coming down the track toward you and get prepared. Good Luck!!!
Commercial property is a niche of real estate that is one that can be very lucrative but it also has more complications than residential.
Commercial is best leased to a franchise operation or an anchor store but as compared to residential, where everyone needs a home. 90% of small businesses go out of business and this has to be put into the equation when choosing to the commercial route.
Commercial is very complex and I strongly believe that if you are new to the game it may be best to start with something less complex.
Again this is my opinion only and I wish you good luck in whatever you decide is best for you.