4 Tips for Landlords Looking to Buy Foreclosure Properties

The property market may be influenced by a lot of uncertainties at the moment, but that doesn’t mean you cannot find great investment properties. There are still a lot of opportunities to seize, including opportunities to acquire foreclosed properties for rental purposes.

Turning a foreclosed property into a rental property is a sustainable business model. It is certainly much more profitable in the long run compared to house flipping. Before you get started, however, here are the four tips you need to know as a landlord.

Outsource Early

The first thing you want to understand about buying foreclosed properties to rent out is that you need to start generating revenue quickly. This will offset some of the investment costs, allowing you to start generating a steady stream of income faster.

Unless you have a lot of time on your hands – and years of experience to rely on – the best way to do this is by outsourcing the management of your new properties to one of the best property management groups.

Bay Management Property Group, a leading name in this industry, is a good example. The company will not only help you prepare the new properties but also market them to their existing database of potential tenants. You can reduce the time needed to start earning revenue by a substantial margin.

Due Diligence Matters

Most foreclosed properties are marketed in great condition, but that doesn’t mean you shouldn’t do your own due diligence before making investment decisions. While the foreclosure properties may appear to be in good shape from the outside, there may be deeper issues under the surface.

The same is true with the history of the property. Once again, you have to take the time to go over all of the documents before jumping the gun. It is also a good idea to go through the history of previous owners as well as the history of the property itself. Never skimp on inspections and work with a qualified real estate agent to streamline the process.

Get Preapproved

If you are financing the purchase with a loan, weigh your options and make sure you get the loan preapproved before entering a bidding war with other investors. Getting a loan preapproved means you can close the deal quickly when you do get a good price for the property. That’s a huge advantage you don’t want to miss.

You may not be able to use a traditional mortgage loan to finance the purchase, but that doesn’t mean you cannot use a loan at all. You can still use a personal loan, use your existing property as collateral for a second mortgage, or turn to long-term loans like a 203(k) loan for help with the purchase. Just make sure the loan doesn’t cost more than you make.

Be Competitive

Last but certainly not least, make sure you are ready to be competitive when bidding for the foreclosed properties you like. The market is hot right now, with gorgeous properties being offered at stunning prices. Don’t always bid low; sometimes you have to invest big to earn big.

That’s it! Keep these four tips in mind and you can enter the foreclosure property market like a pro. It will not be long before you start converting foreclosed homes into rental properties that generate a lot of revenue for years to come.