Are you looking to invest in Fairfax, VA property? If so, one good option you may not have considered is buying a foreclosed home.
Due to the uptick in foreclosure activity (30,784 foreclosures in October), these properties continue to flash investment potential. Like any other significant investment, however, they require a lot of research to pay off.
Not sure if investing in foreclosures is worth your time? Read on to find out how these investments work and how to make them work in your favor!
Should You Invest in Foreclosures?
First things first: investing in foreclosed properties isn't for amateurs. In fact, it's very similar to buying a used car at an auction.
Like used car buyers, many foreclosure investors focus on finding deals. To them, this is the disparity between the auction price and the home's intrinsic value. However, there's a lot more to the investment than the price differential.
This is why seasoned investors focus on researching worthwhile distressed properties in Fairfax. They'll often look for a locale destined for improvement and identify homes that they can sell for a profit.
Choosing an Investment Strategy
Every real estate investor must have a strategy for acquiring and holding a property. With foreclosures, this becomes even more important.
First, you'll need to find out why the foreclosure occurred. Was it due to owner issues or is it a result of a particular trend in the Fairfax real estate market? Some market factors that can influence property demand include:
- Job growth
- Population growth
- Disposable income growth
- Demographic changes
You should also research the foreclosed property's neighborhood. Are there any upcoming infrastructure developments, such as a new school or road? Will the local government support business growth?
Acquiring Foreclosed Homes in VA
Most foreclosure investors tend to find assets by looking at auction publications. They'll then contact the owner before the home goes on the block.
Though this can be a good way to secure a foreclosure, it may not be the best investment strategy. These negotiations often don't give you enough time to fully analyze a real estate investment in Fairfax.
One common alternative is to buy distressed debt from a lender at a discount. See, banks and other lenders don't like acquiring foreclosures. To avoid doing that, they'll often sell nonperforming loans at a major discount.
As an investor, you have more flexibility than a bank. Thanks to your low basis in the investment, turning it into a performing loan isn't as hard. And if you can't work out the loan, you can foreclose on it without competition.
More on Foreclosed Properties
The bottom line: foreclosures can be worthwhile investments. Of course, acquiring the property is only one part of the puzzle. To make the most of it, you need to manage it effectively before selling it.
Need help with managing a distressed property in Fairfax, VA? At PMI of Fairfax, we can help you convert your property into a rental unit. We're also dedicated to maximizing owner profitability and offering excellent customer service.
We've been in this business for 20+ years -- contact us here to see why!
