#3 Investment Under $25,000 for 2007
In some areas of the U.S., foreclosure properties can be found for less than the price of a car. Certain states have particularly low average foreclosure prices statewide, including Ohio ($67,454); Indiana ($73,818); Tennessee ($70,801); Georgia ($120,150); and Texas ($115,180), according to RealtyTrac's 2005 statistics. Other states have pockets with low foreclosure prices, such as Monroe County in the Rochester area of New York ($59,591), according to RealtyTrac's 2005 statistics.
Since these numbers are median prices, investors can be assured that many foreclosure prices are significantly lower than that median. Major metro areas such as Kansas City and Little Rock offer listing prices of $10,000 to $20,000 for non-foreclosure properties, and foreclosure listings in this price range are even more common.
Of course, investors should make sure to perform proper due diligence when researching foreclosures. This includes ensuring that they are aware of any additional liens against the property other than that of the foreclosed note that may have to be paid off before they can have a clean title.
In many U.S. cities, foreclosure properties can be purchased for low prices
Many foreclosure properties are low-income properties, which are generally in the highest demand and typically have a stronger market than higher-income properties. Investors with the ability to put sweat equity into the property can benefit from making improvements to the property and thus increasing its value.
Investment strategies with a foreclosure property may focus on re-selling the property on the regular market or selling it on terms via seller financing. Another strategy could be to buy the home at auction and fix it up to rental condition. An investor could utilize some borrowed funds if needed to fund the remodel. After completing the remodel, the investor can refinance the home at a low loan-to-value, pay off any other borrowed funds and proceed to rent the home out and collect a nice cash flow. Then, since the initial investment would be recovered in the new loan, those funds could be used to do the same thing with another property.
Where to find investments:
Foreclosure listings are available through online services such as RealtyTrac. Local publications will often publicize foreclosure properties, and some counties publish listings on their websites.
