Anybody know much about the process of finding and purchasing foreclosed properties? I live in Orange County, CA and am just a couple years out of college. If you didn't already know, I'm screwed...young people cannot afford to live here anymore. I'm looking for feasible ways to purchase property. Please advise me. My boss bought a forclosed property for $80k about 4 years ago (in North San Diego county)...it's now worth $350k. I think he got lucky...even he says so. Anyway, let me know what you think.
It helps to be really handy. Assume you're getting into a fixer-upper situation, and budget accordingly-- you'll usually need money for repairs. It's not like you can have an inspector look at the place beforehand. You also really need to get in early in the foreclosure process. If you're buying at the auction, you're up against the pros of that field, and most of the bargains are gone.
Agree with everything in your post except this. You can easily make an offer with an inspection-based contingency. It's just that almost always foreclosed properties are listed as is, so your inspection report just verifies what you probably already know. Nevertheless, it's nice to have a summary of all the things that are wrong with a property, because you can use it as a checklist to work against as you prepare for occupancy and/or resale. You could even arrange for an inspection prior to making an offer--although you'd have to pay your inspector and the person handling the transaction would have to believe you are/were serious about making an offer. Ian's second point is excellent. For a first property, unless you know someone in real estate or finance, you aren't likely to get a killer deal anyway. That doesn't mean you can't find a good property that you can add value to, it's just that there are a lot of people out there doing real estate, and the best deals tend to go to people who have connections already established. I have to go to class, but I'll try to give you a little more information about ways you might find a property later.
Thanks guys for the advice and any further advice is greatly appreciated. Matt in the Hat, that is a great question. To be honest with you...I want to have a permanent place of my own...that's the simple answer. Now, I don't know much about real estate, but I assume that you may be getting to the point that I don't really need to have a fully paid-off property. I read a book last year about real estate investing that said that you should finance a property...rent it out...refinance...and use that extra money to invest in new property. And it's a repeated process. Now, Matt, I know I've oversimplified here and probably don't really understand it...but I would greatly appreciate your advice and what you think is the best way to invest in property. Thanks again.
No kidding. Brownj83, why would you want to buy now? It's the peak of the market, and you're clearly priced out of it. If I were you, I'd be doing everything in my power to score with the admin of the loan officer at your local bank. That's about the only way you're getting a leg up in the foreclosure market. Sachin
I'm with other people here, why buy? The issue of whether or not the market is peaking aside, you're young and single, you don't need a house. Sure, you may feel like you're losing out on an opportunity but your not. Traditionally housing appreaciates at a rate similar to bonds. To add to that, how much is a nice one bedroom apartment in your area? $1000/mo? $1200/mo? That's still going to be how much less a month than a mortgage payment? $800? $1000? $1300? I suspect that's what's driving you to the forclosed homes. I'm not sure why you feel compelled to bog yourself down with one. Would you go out and buy a beat up 30 year old car right now as your main and only set of wheels? Imagine how difficult it would be to deal with that kind of car. As you try to rely on it every day to get you around, you're going to be constantly working on it whether it's something that breaks and has to be fixed asap, like the radiator, or you have to spend 20 hours on the weekend trying to do some body work. It's very likely that you're going to end up with the house version of that. You're probably best off putting off purchasing a place until you either have more money or you've found yourself a spouse. I doubt you need the extra space and expenses right now. And if you do want to buy, ask yourself if you want to go that route. Buying a foreclosed home is going to likely end up costing you just as much if not more in terms of money and your time to fix up. If you really want to buy right now, maybe you'd be better off getting a 2nd job and saving up for a year and see how you feel about things then.