How can we make money via foreclosed homes?
There's a lot out there due to the housing bubble. How can we make money from that?
Answers
951 points
Grudun answered one year ago …
There are a lot of ways to make money off of foreclosures. The simplest way is to buy the properties below market, then clean them up a little(or a lot) and then rent/hold the property until the market starts going up(hopefully making a small profit on the rent). Then either sell the home(s) when the market is better resulting in a hopefully large profit or continually raise the rents every tenant/year(market permitting) and steadily increase your monthly cash flow.
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372 points
chidog47 answered one year ago …
You can find some great info about this question with a question I asked earlier this year.
"Foreclosure investments - Are they worth it?"
http://www.tickerhound.com/questions/detail/2008011685f04c/foreclosure-inv estments-are-they-worth-it
sundarkambam responded with a great link http://www.all-foreclosure.com/invest101.htm
EthanR and realsure lay down the reality.
Hope that helps!
4085 points
EthanR answered one year ago …
Grudun's answer is a good one. I do have to correct one misconception that a lot of people have though about rentals. You won't really increase your cash flow by raising your rents every year. That is because the costs of taxes and insurance and maintenance are also rising with each year.
If you buy a foreclosure to live in, it's even better. Just live in the house for two out of any five year period, and when you sell it, you will pay zero taxes on your gain. Plus you can fix it up slowly, and you won't be paying rent or a mortgage somewhere else. The only bad thing is having to move every couple of years. But it's a great way to build cash. You can also live in them for two years, then lease it to someone else who agrees to purchase it in another year. You will get the tax benefits, plus have a tenant in the house paying your mortgage down up until the day of closing.
