Some of the best rehab deals I’ve seen have been bought at foreclosure auctions. Yet, when the rewards are high, so is the risk. The risk comes from many unknowns that are unique to homes sold at the auctions. One of the unknows is whether it comes with its former occupants and, if it does, how to deal with them. There are several reasons why you might be wary of buying a foreclosure that is still occupied.
Condos are rarely the first come to mind when you think about flipping homes. However, there is no reason to avoid them as a real estate investment arbitrarily. The inventory in the DC area is tight, so if a good deal comes along, there is no reason to pass on it just because it’s a condo. Like with everything else in life there are pros and cons of investing in condos. What gets less experienced rehabbers in trouble is that they fail to recognize the unique differences between investing in single family homes and investing in condos.
In the regular transaction between a seller and a buyer, if a seller fails to deliver a clean title, the contract becomes void. No buyer wants to buy a property with someone’s else debt secured against it. It’s the sellers’ responsibility to satisfy all liens secured against the title they are about to transfer. However, this is not how a foreclosure auction works. The simple truth is that failure to research liens before buying a foreclosure can create numerous problems. Here’s how to do your homework in advance, so you don’t regret making that winning bid.
Leo Tolstoy said: “Happy families are all alike; every unhappy family is unhappy in its own way.” As a hard money lender with over twelve years of experience, allow me to wax poetic about my area of expertise. All successful rehab transactions are alike; every unsuccessful is unsuccessful in its own way. Today I want to share a cautionary tale of how title issues after a foreclosure auction can impact a deal.
48 Michael Ct Gaithersburg MD 20877 Offered at $150,000 Condo fee: $293 Rental Income: $1,600+ The only four-bedroom condo in the subdivision! Year built: 1973 Property type: condo/townhouse Levels: 2 levels Living area: 1,365 Assigned parking and plenty of visitors Bedrooms: 4 Bathrooms: 2 ½ CALL OUR SENIOR UNDERWRITER MELISSA FOR DETAILS. 240.436.2340 […]
If you are a rehabber, one of the skills you need is to be able to estimate your rehab’s after-repair value accurately. It’s essential in understanding your deal’s profit potential. Make a mistake, rely on wishful thinking or count on appreciation and – poof! – you are lucky to get out by the skin of your teeth. If you are planning to work with a hard money lender, your rehab’s after-repair value (ARV) becomes a part of underwriting. Hard money lenders base their loans on the after-repair value and not on its purchase price or as-is value. So another reason to know how to estimate your rehab’s ARV correctly is to know how much of a loan you can qualify for.