*Keep an open mind. Just because the neighborhood looks run down and you might not want to live there personally, it doesn’t mean that house won’t resell or rent to someone who can afford it.
*Avoid neighborhoods with multiple foreclosures. You will eventually have to compete with those houses for tenants.
*Aim to charge rent that totals about 1% of the purchase price. So, if you buy the house for $150,000, make sure that you can charge $1,500 monthly rent. That offers a healthy annual return of 12% before expenses and provides a good cushion in case there are unexpected repairs.
*Only buy the first mortgage. If you bid for a home at a courthouse auction make sure that the mortgage you buy is a first mortgage and not a line of credit or other subordinated loan taken against the property. Only the mortgage in first position can ensure you the keys to the house.
Be aware of back taxes, which need to be paid in order to take ownership of the house. The back taxes have to be figured into your acquisition costs.
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Do you want real-time notice via email when foreclosures become available? Just email me at billy@billyandrew.com with the subject line: Foreclosure Notice. Feel free to put any additional information you believe could help me assist you in your search.
Monday, June 1, 2009
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