Top Locations 10 Best Places to Buy Foreclosed Homes to Rent Out in 2020 by Hamza Abdul-Samad March 6, 2020March 1, 2020 by Hamza Abdul-Samad March 6, 2020March 1, 2020 Buying a foreclosed home to rent out can make for a very good real estate investment. You can buy these investment properties for below market value but typically, you can rent them out at market rates and generate positive cash flow. However, just like with other real estate properties, location is a key factor for success with foreclosures. So, where are the best places to buy foreclosed homes? But first… What Are Foreclosures? Before we discuss the best places to buy foreclosed homes, we need to take a step back. What exactly are foreclosure homes? In order to answer this question, we need to explain the foreclosure process. Mortgages are the sole financing method for many real estate deals. In order to secure a mortgage, borrowers must acquire one from a lender. Local and national banks are typical examples of lenders. However, real estate investors may take out loans from other lenders, such as private money lenders. Related: 8 Best Investment Loans for Real Estate in 2020 Naturally, a borrower must pay off the mortgage on a monthly basis. However, if a borrower fails to make 3 consecutive mortgage payments, the bank will issue a Notice of Default. In other words, the pre-foreclosure process will begin. When this happens, the property owner can sell the property through a short sale. Doing this will pay off the outstanding debt and stop the foreclosure process. However, if a sale does not happen within 2 to 3 months, the bank will attempt to sell it at a foreclosure auction. If the property does not sell, the bank will continue with the foreclosure process. Then, the lender takes ownership of the property from the owner. The owner will also have to vacate the property. Finally, the bank will do its best to quickly sell the property. As a result, the foreclosed property will typically be sold below market value, making it a cheap purchase. Why Should You Be Investing in Foreclosure Homes? You might have heard that foreclosure rates hit new lows in 2019. So, why even bother with foreclosed properties? Why should you find out what the best places to buy foreclosed homes are? Low foreclosure rates are a healthy sign for any real estate market. Nonetheless, investors can still benefit from existing foreclosures in the best cities to buy foreclosures. Here are some reasons why foreclosure investing can be worth it for real estate investors: Related: Is Buying Foreclosed Homes a Smart Real Estate Investment? Lower Property Prices As mentioned earlier, foreclosure homes are usually cheaper than non-foreclosed properties. This is due to the properties being sold below market value to ensure a quick sale. For real estate investors, this is an excellent opportunity to save money when buying an investment property. In fact, the average discount when you buy a foreclosure is about 15%. Plenty of Financing Options The general assumption is that foreclosed homes must be bought with cash. But depending on the way an investor goes about buying foreclosed properties, there are actually a few different real estate investment financing options available. If the foreclosure is not a total fixer-upper, you may qualify for a conventional loan. If it is, there are different rehab loans that a real estate investor can qualify for. And since the investment property is priced below fair market value, buyers will pay lower down payments. Mortgage payments will also be cheaper. Shop around and try to find less expensive closing costs and interest rates. High Return on Investment Above all, the purpose of rental properties is to have a high ROI. By buying a foreclosed home to rent out, high ROI is a surefire outcome. Lower property prices and costs magnify profit made from renting. Any renovations will add to property value and rental income. Of course, the ROI you generate will depend on the location. So let’s look at the best places to buy foreclosed homes to ensure you land a high return property. 10 Best Places to Buy Foreclosed Homes in 2020 So, where are the best places to buy foreclosed homes? According to Mashvisor’s real estate and foreclosure data, these are the best places to buy foreclosed homes in the US housing market 2020: Little Rock, AR Median Property Price: $141,055 Price per Square Foot: $75 Price-to-Rent Ratio: 10 Traditional Rental Income: $1,152 Traditional Cap Rate / Cash on Cash Return: 3.6% Glendale, AZ Median Property Price: $283,520 Price per Square Foot: $151 Price-to-Rent Ratio: 14 Traditional Rental Income: $1,689 Traditional Cap Rate / Cash on Cash Return: 3.5% Baltimore, MD Median Property Price: $136,669 Price per Square Foot: $101 Price-to-Rent Ratio: 9 Traditional Rental Income: $1,280 Traditional Cap Rate / Cash on Cash Return: 3.2% Philadelphia, PA Median Property Price: $196,155 Price per Square Foot: $129 Price-to-Rent Ratio: 13 Traditional Rental Income: $1,708 Traditional Cap Rate / Cash on Cash Return: 3.0% Pittsburgh, PA Median Property Price: $171,398 Price per Square Foot: $100 Price-to-Rent Ratio: 12 Traditional Rental Income: $1,194 Traditional Cap Rate / Cash on Cash Return: 2.3% Columbus, OH Median Property Price: $123,602 Price per Square Foot: $93 Price-to-Rent Ratio: 10 Traditional Rental Income: $1,082 Traditional Cap Rate / Cash on Cash Return: 2.3% Cincinnati, OH Median Property Price: $139,851 Price per Square Foot: $88 Price-to-Rent Ratio: 12 Traditional Rental Income: $1,612 Traditional Cap Rate / Cash on Cash Return: 2.3% Mesa, AZ Median Property Price: $285,605 Price per Square Foot: $163 Price-to-Rent Ratio: 18 Traditional Rental Income: $1,355 Traditional Cap Rate / Cash on Cash Return: 2.2% Miami, FL Median Property Price: $321,046 Price per Square Foot: $192 Price-to-Rent Ratio: 14 Traditional Rental Income: $1,919 Traditional Cap Rate / Cash on Cash Return: 2.2% San Antonio, TX Median Property Price: $191,662 Price per Square Foot: $107 Price-to-Rent Ratio: 11 Traditional Rental Income: $1,443 Traditional Cap Rate / Cash on Cash Return: 2.2% Start your search for a foreclosed investment property in the city and neighborhood of your choice. Search for My Investment Property How to Find Foreclosed Homes for Sale After reading this blog, you’ll probably want to jump right in and invest in foreclosure properties. However, that begs the question of how to find foreclosures. Fortunately, the answer is quite simple and short. Our 3-word answer is the Mashvisor Property Marketplace. Mashvisor Property Marketplace The Mashvisor Property Marketplace is the ultimate source of foreclosed properties in the US housing market. The marketplace allows investors to easily search for foreclosed property, even those off the MLS. The search is quite comprehensive. You have a selection of vital filters at your disposal such as location, price, property type, and much more. It also provides real estate investors with detailed analytics about each selected property. As a result, you will understand the investment property’s performance in terms of rental income, cash flow, and return on investment. All it takes is a few minutes to find the best foreclosures for sale in the Mashvisor Property Marketplace. Start your search for foreclosed homes for sale in the Mashvisor Property Marketplace. Related: How to Analyze Foreclosures for Sale for Investment All in all, foreclosed homes can make for the best real estate investments. This is especially true in the best places to buy foreclosed homes. To start searching for properties in any of the best places to buy foreclosed homes listed above, CLICK HERE to start a FREE trial with Mashvisor’s tools, such as the Property Marketplace! Start Your Investment Property Search! START FREE TRIAL FinancingForeclosuresMiami FLPhiladelphia PAPittsburgh PAProperty Search 0 FacebookTwitterGoogle +PinterestLinkedin Hamza Abdul-Samad Hamza is a long-time writer at Mashvisor. With a focus on real estate investing tips, concepts, and top investing locations, he aims to help all aspiring investors who come across his blogs to hit the bank with their investment property. Previous Post A Guide to the Passive Income Real Estate Strategy Next Post The Ultimate Rental Inspection Checklist for Property Managers Related Posts Why Raleigh Real Estate Investments Are Good For 2017 San Antonio Real Estate Market 2019: Why and Where to Invest Kansas City Real Estate Market 2018: Invest Now! Here’s Why Sunshine Investing- The 5 Best Places to Own a Beach House Cities With The Least Airbnb Legal Issues Long Beach Real Estate 2020: Time to Invest? Should You Be Investing in Orlando Real Estate Investment Properties in Early 2018? Las Vegas Real Estate: The Hottest Real Estate Market in 2018 Should You Go for a San Diego Investment Property or a Los Angeles Investment Property in 2018? Should You Go for Chicago Real Estate Investing? 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