It is common knowledge that many people invest their money to gain a profit. Some people may buy stocks, where the company later pays dividends to shareholders—the person’s money earns money, as long as the stocks are up. Other people buy something concrete and make a profit when the item increases in value. Regardless of which types of investments you have made in the past, or maybe you are a first time investor, you should consider investing in real estate. As real estate is back on the rise, now is a great time to invest in properties that you could either use as a rental or sell for a profit. Popular TV series, such as “Flip this House” or “Flipping Boston,” have proven the large amount of money that can be made by investing in real estate. To get the most out of your investment, I recommend investing in foreclosure and repo properties in Southern New Jersey for various reasons.
What are Foreclosures and Repo Properties?
Before I tell you the benefits of investing in one of these properties, you should probably be familiar with what they are. An investor can purchase a foreclosure property when it is in the initial phase of default, at foreclosure auction, or from the bank after the property has been repossessed. Usually, if the home is in the first stages of default, the bank will determine the amount of equity that the property has through a Broker’s Price Opinion (BPO) or through an appraisal. The investor, then, would purchase the property based on the BPO or appraisal value. If the property is not sold during this time, it goes to the foreclosure auction, where the starting bid is set at the outstanding loan amount, the amount owed by the previous owners. If the property is not sold at the auction, it is then repossessed and becomes a Real Estate Owned (REO) property, where it is owned by the bank/lender.
Why are These Properties Good Investments?
1. A Discounted Price
The most notable attraction to these properties is the discounted price. When the property is in the initial phase of default, you can find a “notice of default” listing in the newspaper and approach the property owner before the home goes into foreclosure or repossession. At this point, the owner may be willing to sell the property at a discounted price in order to relieve him/herself of the financial burden. If the home is in foreclosure, you can purchase the property, sometimes for a steal, at auction. Also, once the home is a REO most banks/lenders are eager to negotiate in order to remove the properties from their inventories. Lastly, to entice buyers, banks usually waive any outstanding property taxes, so even if the previous homeowners stopped paying their property taxes, you wont be held responsible for paying them. This means that you could find a great property at a discounted price, where you could potentially make a large profit.
2. Foreclosures and Repo Properties are Bank/Lender Owned
Because the ban/lenders are the ones selling these properties, you don’t have to deal with the previous owners. Many investors prefer to deal directly with the banks, not only because the banks are eager to sell, but because many homeowners have sentimental attachments to their homes, which leads them to be more reluctant to negotiate price. Dealing directly with the bank/lender makes negotiating easier and with a strictly business attitude.
3. REO Properties Can Be Inspected Before Purchase
While individuals cannot have a property being sold at auction inspected, Real Estate Owned properties can be. In most cases, REO properties are not turn-key homes and require some work. Having the option to inspect the home will allow you to know how much work the home needs so you can decide if the property is worth the investment.
4. The Area: Southern New Jersey
As discussed in the South Jersey Magazine, the real estate market in South Jersey outdid the projected numbers over the last few years, as housing prices have risen, specifically at the shore area. Investors have made large profits ‘flipping’ houses, buying them at low prices (usually foreclosures or REO properties) and made money either selling or renting their properties. Currently, specifically in Marlton, NJ, the median price is about $200,000, while it can get as high as $400,000, based on the area and home. You can expect to get foreclosures and Real Estate Owned properties for even less. The Southern New Jersey market is only going to continue to grow, making it a prime time to invest.
How to Start Investing?
As with buying any property, it is crucial to have a good real estate agent on your side. I cannot stress the importance of this enough and would recommend contacting a Marlton, NJ Realtor, even if you are only considering investing. By contacting us, we can tell you about foreclosure and repo properties that are currently on the market. As we have a lot of experience with these properties and hold no sentimental attachments to the homes in question, you can expect to know all of the information you need to know throughout the sale. This will allow the transaction to happen easier and faster than it would be otherwise.
Investing in a foreclosure or repo property has the potential to be a grand investment. You have the ability to buy a property at a discounted price, whether it is in the initial stages default, at a foreclosure auction, or when it is a real estate owned property. These properties make great investments as they can be sold, sometimes after a little TLC, for way more than the price you purchased it for or can be turned into a great rental property. No matter which type of property you are interested in investing in, having a realtor to assist you and guide you through the process is essential.