Archive for the 'Investment Properties' Category
1 Foreclosure, 2 Foreclosure, 3 Foreclosure, 4…
This past Sunday there were 36 foreclosures advertised in the Hartford Courant. A few months ago there would only be one page of foreclosures advertised. Now we’re up to 3-4 pages of foreclosures every Sunday. This week, one of them was on my block in the West End.
The sign went up on the lawn 2 weeks ago. After it was listed in the Courant, I had 3 people call me to ask how they could go about purchasing the house. Here was my quick and dirty response… First, you should call the attorney managing the sale. They will give you specifics on how much debt is outstanding on the property (that they actually know about). The bank has also done an appraisal and you’ll need to bring a bank check to the auction in order to participate. The check is for 10% of the appraised value, or about $45,000 in the case of the subject house. There is no mortgage contingency allowed, so you need to have your money lined up if you were to actually win the auction, otherwise you can lose your deposit if for some reason you couldn’t secure a mortgage (the $45,000). Essentially, you have to be a cash buyer. There is no guarantee that you will actually be able to get into the house on the day of the auction in order to perform an inspection, so you may be buying the house blind. Who knows what the condition will be on the inside?
The takeaways from my mini-lesson: you need to have cash readily available in order to participate, you’d better be handy or have a contractor in your back pocket because the property may be a mess on the inside, and you need to have a market analysis done before the auction to understand what you’re willing to pay and the actual value of the property (the bank’s appraisal isn’t always accurate).
Everyone is fascinated with foreclosures now and think they’re a great way to make a quick buck. My advice, leave them to the savvy investors or contractors. But if it’s something you want to try and get into, here’s an excellent article from the New York Times that talks about someone that does short sales as their business. I personally hope my neighbor can save his house before it goes to auction.
Real Estate Investment Book Recommendation
I’ve mentioned previously that I recently became an investment property owner and believe the market is now ripe for people who have a little extra cash to dive in. There is a new book out that I’ve started reading and it’s excellent. Here’s a supporting book review that I found on Boston.com. Enjoy!
The Making of a Landlord
The hubby and I recently became investment property owners in West Hartford. It’s exciting and nerve-wracking at the same time. Kind of like watching your teenager learn to drive, but with your car.
It took us about a month to get the place rented after our closing. Here are a few tips you might find useful if you’re thinking about investing:
1. Craigslist is a free and easy way to find potential renters. We used it in combination with Postlets and that seemed to do the trick as far as finding people interested in our unit.
2. Try to do a phone pre-screen before meeting the people at the apartment. Do they smoke? Do they have pets? How many people will be living there and signing the lease? Make sure if you own a condo that they will follow the condo association rules and regulations.
3. ALWAYS run a credit check. We had a few people fill out the application and then bug out once they learned we were actually going to run their credit history. It will save you a lot of trouble and potentially money down the line.
4. Don’t be lazy and make sure the place shows well. The unit we bought was in fairly good shape, but had bright yellow and baby blue walls. It was clean, so we didn’t think much of it, and decided not to bother painting. After 3 weeks of no takers we decided to paint all of the walls a neutral color. It made a huge difference and the place was rented the next day.
ARM mortgages are just beginning to adjust and I believe that a lot of investors that bought at the top of the market are going to be squeezed soon, flooding the market with investment properties. Additionally, due to the tightened mortgage lending practices, there are going to be fewer buyers out there, so more people will need to rent. This will keep rental rates healthy. So, if you have some extra cash and think that being an investment property owner might be the thing for you, it might just be the time to start looking.