When banks take possession of foreclosed properties, they typically sit vacant. When this happens, the yards and the homes themselves will deteriorate, often becoming eyesores for their neighborhoods. This will cause property values of perfectly good homes in the same neighborhood to begin a steady decline.
Vacant properties pose numerous risks, from kids getting hurt by playing around in them to their attraction for drug dealers and users, or worse. It is not unusual for vacant houses to be stripped of their copper plumbing, heating equipment and air conditioning units. Then they might even be vandalized, set on fire or ultimately demolished. We are all familiar with such scenes in some of the rustbelt cities, and it has taken decades for the communities to recover — if they ever do.
In California and Florida, foreclosed properties with swimming pools create special problems. Unattended pools can become breeding grounds for mosquitoes. Some communities even have to spend much needed funds on helicopters to identify these pools, and ultimately send city health inspectors in to chlorinate the pools in order to prevent a health hazard. Foreclosed properties are bad for our communities!
When investors acquire and fix up these properties, the overall landscape of the community is improved. Usually investors buy to rent — which provides people who need reasonably priced housing a place to live. In addition it provides neighborhoods with residents who care about the properties in which they live. When this happens market values tend to stabilize, and then generally increase over time. The psychology and well being of neighborhoods and communities are also stabilized and improved. When people look around and see real estate activity, they feel better about the future. Since our economy is based on psychology, a positive outlook can have powerful multiplying capabilities.
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America has always thrived on the basis of investment and hard work by entrepreneurs. America needs investors! Foreclosed real estate properties of all shapes and sizes are currently in abundance, and they represent a tremendous opportunity for our nation to build value and increase wealth — while at the same time improving the overall economy and well being of our citizens.
Here are some tips all investors can benefit from when getting into the foreclosure game:
Subscribe to newspapers and online services that publish pre-foreclosure notices in your area. Read them on a regular basis, skipping over REO properties already listed with a Realtor. Get each targeted homeowner’s address and phone number as quickly as possible. Whether because state law prohibits it, or foreclosure attorneys opt not to, foreclosure notices do not routinely include the address of the property. In most states, the fastest and cheapest way to find a foreclosure address is to go to the County office. Typically, you can use their computers for free. Simply type in the names of the individuals on the foreclosure notice, and you’ll usually find the property’s street address at the bottom of the original recorded mortgage document where it states, “Commonly Known As.”
Get personal. Many desperate homeowners are seeking a way out of their financial predicament without declaring bankruptcy or forfeiting their dignity. Become the person’s trusted vent-to expert. Start by knocking on foreclosure victims’ doors and asking them three questions: Is there anything that I can help you with at this current time? What caused your situation? What would be your ideal solution? By building comfort and gaining a homeowner’s trust, the homeowner will most likely sell to you.
Make sure the numbers work. If a foreclosure deal sounds too good to be true, it probably is. Do the math. Be sure to protect yourself, and your broker, by ensuring the correct written language is inserted into any contract. Develop expert knowledge, and sharp eye, to become the exception.
–Matt Milmeister, author of Mastering the Art of Foreclosure Investing