|Buying Property Tips#1: Choose the Right Location|
|Before you choose a location, it is of utmost importance that you consider the development prospect of the area. Other factors to consider here is crime record of the area, availability and nearness of public facilities and utilities.|
|Buying Property Tips#2: Study the Local Market Dynamics|
|It is important to get well familiar with the local realty market. Learn the variation in property prices by street. Don’t shy away from asking a few realty investment agents questions to get better insight on the matter.|
The Internet wave introduced consumers to worldwide communication at the click of a button. Slowly, people started shopping online. And, now, consumers are even purchasing real estate properties online.
Foreclosed properties, which are sold through auction, are now being sold through online auctions. With the number of foreclosures at a high like never before, more and more investors are bidding for promising properties. With foreclosed property investment promising a high ROI, real estate investors are attracted to this investment.
The online sellers
Philadelphia Investment Homes are mostly sold by people who have acquired these foreclosed properties at great deals from bankers and lenders. Henceforth, they have created an online presence to sell these properties to prospective investors and buyers.
Philadelphia real estate investing through online auctions sounds luring; but it has its own setbacks too. Investors must be aware of the pitfalls before treading on this path.
|Buying Property Tips#3: Choose the Right Property|
|Getting the right property right away is quite unlikely. First, you need to be clear on why you want to buy an investment property. After that, you will be able to make right decision based on factors like remoteness or accessibility of the property.|
|Buying Property Tips#4: Do the Math Properly|
|Get a precise idea on the value of assets you have available. If you are investing in rental property, make sure you can easily cover the mortgage payment through rents. Additionally, get a clear idea on the appraisal value of the property beforehand.|
|Buying Property Tips#5: Consider Additional Expenses|
|When purchasing an investment property, it is not only the selling price that investors need to consider. There are various additional expenses such as property tax, home owner’s insurance, repair & maintenance that must be considered.|
- Foreclosed properties are sold “as-is”. If you find a broken furnace or a dilapidated wall after acquiring the property, you cannot go to the owner and demand repairs.
- Often, property owners are entitled to a grace period anywhere from 10 days to 700 days; depending on the governing law to repay their dues and avoid foreclosure. You will lose the alluring property in the event of the owner re-paying the loan amount.
- Properties are foreclosed because the owners did not have the money to pay on their loans. Thus, It is expected that the owners would have lost interest in maintaining the property. You can expect the property to be in a distressed condition.
- Vacant properties are very attractive for thieves. You might find things missing after acquiring the property.
- You cannot inspect the property. When foreclosures are sold at online auctions, you cannot get a professional inspection of the property. Therefore, you might end up with a “completely” distressed property in the hope of investing in a promising property. Finally, your repairs and rehab charges might eat into your expected profits.
- Sometimes, foreclosed properties come with attached liens and debts like IRS debts or unpaid taxes. Clearing all these dues will immediately reflect on your profit margin.
Notwithstanding these risks, online auctions are definitely more convenient than physical auctions. You can do it from the comfort of your own home, and when time permits.
Yet another advantage of online auctions, when compared to courthouse auction is that you get a reasonable time to pay your purchase amount; usually 30-45 days. You only need to pay a token amount, like 10% of the entire price initially. Thus, you are given time to arrange your finances.
Buying foreclosures from auctions is fraught with risks. As you cannot inspect the property yourself, an ideal route is to conduct a thorough market research about the property and the neighborhood in question. This will give you a clear picture of the expected profits from the deal. Furthermore, you will be aware of the risks before acquiring the property.
Patience and research is the key to foreclosed property investment.
|Buying Property Tips#6: Inspect the Property|
|To ensure that you are getting everything you are paying for, a thorough inspection of the property is essential. Besides ensuring that you are not overpaying, a rigorous property inspection also gives you a good estimation on what the additional expenses might be.|
|Buying Property Tips#7: Pick the Right Financing Option|
|While interests on investment property loans are tax free, some borrowing costs aren’t immediately tax deductible. Knowing that, and structuring your financing in accordance is crucial. Don’t hesitate to ask for help from a financial advisor.|
|Buying Property Tips#8: Invest through Equity|
|One of the best ways to purchase an investment property is to leverage the equity of another property (including your primary home). This is a preferable way among regular investors, especially due to added tax deduction advantages.|