Hi, I have read elsewhere on this site (can't find the thread now) that buying forclosures is risky and should be avoided. The reason is you can not do a property inspection to see if there are any damages in the home. Is this true? If so what do you guys do to keep from buying homes with problems?
Thanks
i know what thread your talking about and i dont believe anyone said "you cant do an inspection" the truth is that you have a right to inspect the property and the time frame for that is usually one-two hours before the auction. unless you go to the house before the auction and snoop around then the hour before the auction is the only time you can inspect it.
so it wasnt a question of foreclosures being risky because your "not allowed" to inspect them, but rather weather a person is qualified or not to inspect them and know what is necessary to fix them, before jumping in head first.
nothing wrong with taking risks just make sure you take educated risks and if not then you better be able to deal with the consequences.
good luck.
Foreclosures are risky if you don't have a method of analyzing the deal and know how much to offer the seller or bid at the sale. In CA trustee's sale you have no right to inspect the property. If it's vacant there will be nobody to stop you so make your own decision there.
In CA there is Civil Law governing certain foreclosure procedures so it's in the compliance with those laws that makes it complicated and therefore scares off a lot of people. There's always risk in investing, otherwise they'd call it "Come get free money." The name of the game is about minimizing the risk by considering what could go wrong and what can you do about it?
[ Edited by radio52-com on Date 07/21/2005 ]
All businesses assume risk. Smart business people minimize that risk as much as possible to make smart decisions which can still backfire. This is true in all decisions you make and you just have to get used to this fact.
I am curiuos are there foreclosure investors from Nashville TN that now the specific laws for Tennessee. I am considering several propertis that are up for auction in a few weeks. Can I inspect them legally?
do a google search for a local investment club in your area. i suggest finding it and joining it. you can get the best advice from people who are already doing it in your area. usually good attornies attend the meetings as well. those are the people you need to ask about legalities. in my experience these attornies are more then happy to answer any questions because they want to get new clients. talk to people and find out what the best way is to invest in your market. i have never bought a property at auction because its such a hot market in my area that they go for near full price. people are willing to buy them at a discount of only about 10k these are people that are going to live in them and usually not investors. check it out. good luck.
I've found a strategically offered twenty "for a quick look"(try charm first) helps to get in an occupied house. Remind them you may buy the house, they may want to get on your good side. A good entree is to ask, "I heard this house is for sale...?" offered tentatively and as gently as possible. I've seen several foreclosures recently (and bought two) for nothing, the people seemed happy to show it. You can't really do a full on inspection, but remember the bank did that before they loaned on the property and it passed then.
Even rented the house back to one gal; she paid me $1000 (rent & dep.) the day I bought it--for half of market value--last week. She was mowing the lawn the day before the sale. If that's not a good sign of a good tenant, then I'm a dupe. She was unemployed awhile and got too far behind in payments, but seems stable now. I know it's not good practice to rent back, but it felt good this time, and she sure was happy about not having to uproot her family.
The owners who receive a notice of foreclosure can sell the house before the bank takes it. I favor these situations because the owner allows you to enter the house and you can even get an appraisal done if you wish.
When the owner calls me I am polite and let them do the talking. They usually explain how they got into this situation. They want to sell the house in order to save their credit and start over (well at least most of them understand this, but not all).
The classic call I get is, "that's my husband or wife's problem, I moved out!"
[ Edited by avenue_investments on Date 07/29/2005 ]
There was a article just posted on this site about the risks:
http://www.thecreativeinvestor.com/residential/Article986-Foreclosure_Risk_Factors.html