Every investor venturing in real estate aims at getting the best deals that generate the highest returns. One of the sources that some people ignore is REO properties. These are the kind of properties that are owned by the Bank. REO properties originate from a buyer defaulting on the mortgage payments. The home may also fail to get a buyer from the foreclosure auction. Since the bank takes ownership of these properties, they become a great investment deal.
A lot of people who begin investing in real estate do not understand the benefits of REO properties. They can generate good profit for any landlord or flipper. Investing in REO properties is a smart move that you should consider because such homes come at discounted prices.
Since the bank does not want to lose money from this investment, they are motivated to sell any home that they repossess. REO properties are a liability to the bank, and therefore they do their best to reduce losses. They offer some REO properties at a low cost than the market value. As an investor, you can get REO properties with little capital.
Purchasing real estate property comes with some legal issues. Issues such as title liens and property taxes can deter you from owning property. This is not the case when purchasing REO property. When a bank takes ownership of land or home, they clear any title liens against it. They also settle any related taxes against the property. The status of such property is therefore not questionable.
Purchasing REO property is easy because you don’t have to worry about settling such legal issues. It also eliminates the need for negotiation since there is no homeowner involved. You can save a lot of money from buying REO property. They also produce high returns. If you are a landlord, you can purchase REO property and convert it into a rental one. From this, you earn by collecting rental income from your tenants.
The property can give you cash flow within a few months as soon as you have enough tenants. You can also sell it at a higher price than you bought it, therefore, gain value when it appreciates. There is also an option of flipping the REO property. A house flipper can get quick cash by purchasing the house, rehabilitating it and then selling it high.
The problem with REO properties is that they are competitive since some investors know that they can make money fast from the investment. Get a real estate agent who knows how to buy REO properties from Martin & Co firm. They can help you formulate a good offer for you to beat the competition. Beware that banks sell REO properties without making any renovations on them.
You should be ready to incur some repair costs when you buy Reo properties. Though some properties may need more fixing than others, there is an option of hiring a home inspector to determine the extent of damage before buying REO property.