Although they come with their fair share of risks, foreclosed homes can make for some of the best real estate deals in the US housing market. This is such a commonly held belief in the real estate industry that one of the most frequently asked questions in our investment community is:
How can I find foreclosed homes near me?
Before I answer this question, there is another question real estate investors should be asking themselves first:
Should I Buy Foreclosed Homes for Sale Near Me?
If you really want to find the best deals on foreclosures, you need to conduct real estate market research before selecting a location. Whether you plan on flipping foreclosed homes or implementing a rental property investment strategy, you have to figure out if your local housing market is the right place to do this.
This is really important. Some beginner real estate investors focus on finding cheap foreclosed homes. A low property price = a good real estate deal, right? Well, not always. Let’s say you want to rent out the foreclosed home. If you purchase it in a real estate market where the rental income potential is low and the population is decreasing as people leave the area in search of better opportunities, you may end up accumulating a lot more in vacancy costs down the line. I’m talking about the real possibility of negative cash flow if you choose the wrong location. Even if you’re going for the fix and flip real estate investment strategy, a bad location could also mean negative cash flow as you struggle to find a buyer.
Related: How to Choose a Real Estate Market to Invest In
So, how do you find the best places to buy foreclosed homes? It’s among the steps in this guide for how to find foreclosures. Let’s take a look.
How to Find Foreclosed Homes for Sale in 6 Easy Steps
Step #1: Decide on Your Real Estate Investment Strategy
Before you can pick a real estate market and start your foreclosure investment property search, you need to decide on your real estate investment strategy. Among the most popular real estate investment strategies in the US housing market today are:
- The Fix and Flip Real Estate Investment Strategy: This strategy is all about buying investment property below market value. Typically, it is in need of major repairs. Once renovations are complete and you’ve successfully forced appreciation, you flip the house for a profit. Note that if you focus on foreclosed homes, you may be able to find them for below market value and flip them for a higher price without major renovations if the low price is coming from its foreclosure status.
- The Buy and Hold Real Estate Investment Strategy: To succeed with this investment property strategy, you have to buy property in a real estate market where properties are forecast to appreciate. Hold onto the investment property for a few years and maintain it. Then sell it once it’s value has gone up.
- The Rental Property Investment Strategy: This is actually the best way to invest in real estate in 2020. The rental property investment strategy consists of buying investment property in good condition, carrying out any repairs that make it livable and more attractive to local renters, and then listing it for rent. You’ll have to manage the rental property but you’ll also be able to enjoy positive cash flow every month. You also have two different rental strategies you can implement:
- Airbnb Rental Strategy
- Traditional Rental Strategy
To learn more about Traditional vs Airbnb investments, check out this real estate infographic.
So which strategy should you go for when buying a foreclosed home? If you’re a beginner real estate investor, it’s generally recommended that you opt for renting out your foreclosed home. Although it requires ongoing work and a long-term commitment, it involves less risk and you can always hire a professional property manager. That way, you can enjoy the positive cash flow from a passive rental income.
Step #2: Identify the Best Place for Buying Foreclosed Homes
Now that you know which real estate investment strategy you want to follow with your foreclosure, it will be easier to select a housing market. For example, if you’re looking for the best places to implement the buy and hold real estate investment strategy, check out this list of the 5 Best Cities for Real Estate Appreciation in 2020. You can find similar lists for the above-mentioned strategies on Mashvisor’s real estate investment blog.
Mashvisor can also help you find the best cities for buying foreclosed homes to rent out. Using our real estate investment software, we have pulled foreclosure rental data on major cities in the US that currently have foreclosure listings for sale. Check out the traditional and Airbnb data to see how foreclosed homes perform as rental properties in these cities:
Mashvisor’s Traditional Foreclosure Data by City
|City||Traditional Rental Income||Traditional Cash on Cash Return|
|West Palm Beach, FL||$1,916||2.63%|
|St. Louis, MO||$970||2.48%|
|San Bernardino, CA||$1,746||2.32%|
|Virginia Beach, VA||$1,451||2.22%|
|Little Rock, AR||$1,051||1.98%|
|Colorado Springs, CO||$1,581||1.88%|
|San Antonio, TX||$1,265||1.82%|
|Kansas City, MO||$1,089||1.70%|
|New York, NY||$2,301||1.47%|
|Las Vegas, NV||$1,391||1.45%|
|San Diego, CA||$2,408||1.35%|
|Saint Paul, MN||$1,326||1.32%|
|Los Angeles, CA||$2,808||1.22%|
|Jersey City, NJ||$1,947||1.16%|
|San Jose, CA||$3,405||1.12%|
|Long Beach, CA||$2,154||1.06%|
Start your search for a foreclosed home for sale in the city of your choice.
Mashvisor’s Airbnb Foreclosure Data by City
|City||Airbnb Occupancy Rate||Airbnb Daily Rate||Airbnb Rental Income||Airbnb Cash on Cash Return|
|Little Rock, AR||62.24%||$96||$1,790||5.09%|
|Virginia Beach, VA||45.27%||$231||$2,338||5.03%|
|San Antonio, TX||52.71%||$122||$2,113||4.98%|
|Las Vegas, NV||54.68%||$200||$2,562||4.51%|
|Kansas City, MO||54.64%||$120||$2,166||4.06%|
|San Bernardino, CA||58.88%||$141||$2,543||3.78%|
|Colorado Springs, CO||54.15%||$132||$2,214||3.50%|
|Long Beach, CA||65.40%||$152||$3,918||3.26%|
|St. Louis, MO||49.74%||$108||$1,425||3.17%|
|West Palm Beach, FL||56.74%||$182||$1,927||2.95%|
|Saint Paul, MN||54.65%||$146||$1,969||2.86%|
|Los Angeles, CA||67.65%||$173||$3,973||2.67%|
|San Diego, CA||57.34%||$171||$3,153||2.46%|
|Jersey City, NJ||56.30%||$116||$1,824||1.29%|
|San Jose, CA||61.03%||$199||$3,329||1.08%|
|New York, NY||54.82%||$168||$1,822||0.92%|
Note: Be sure to check Airbnb regulations in any city where you wish to buy a foreclosure to rent out on Airbnb.
You’ll also want to pay attention to the median listing price for foreclosures. This will help you select a location where you can actually afford to buy foreclosed homes. Take a look:
Mashvisor’s Median Foreclosure Prices by City
|City||Median Listing Price|
|St. Louis, MO||$137,321|
|Little Rock, AR||$165,139|
|San Antonio, TX||$178,538|
|Kansas City, MO||$181,662|
|West Palm Beach, FL||$251,681|
|Saint Paul, MN||$252,707|
|Virginia Beach, VA||$282,890|
|San Bernardino, CA||$323,503|
|Las Vegas, NV||$341,540|
|Colorado Springs, CO||$390,845|
|Jersey City, NJ||$465,027|
|Long Beach, CA||$592,199|
|New York, NY||$653,509|
|San Diego, CA||$684,994|
|Los Angeles, CA||$780,590|
|San Jose, CA||$1,045,661|
Choose a city based on this foreclosure data. The data will also help you decide once and for all if you should bother searching for foreclosed homes in your area or go for long distance real estate investing.
Whether you decide to buy foreclosed homes in states like Ohio, Florida, Michigan, or New Jersey or in major cities like Philadelphia, Fresno, Memphis, or Dallas, make the decision based on real estate data. Get access to more data from Mashvisor by signing up now.
Step #3: Conduct a Neighborhood Analysis
The next step is to find the best neighborhoods in your market of choice. You want to make sure that these neighborhoods have foreclosed homes for sale right now that will perform well. For this, you’ll need to conduct a neighborhood analysis. The best way to do this while trying to find foreclosed homes to rent out is to use Mashvisor’s Real Estate Heatmap Analysis Tool.
Let’s say you want to find foreclosures in NYC. First, type in New York City into the real estate search engine and select New York from the drop-down menu:
You’ll be taken to a map of New York City neighborhoods. And you’ll be able to see all of the investment properties for sale in the New York City real estate market:
However, at this point, you’re seeing all of the New York City income properties for sale. You need to select the foreclosure search filter to narrow down your search. You’ll get access to this unique filter when you sign up for an Expert Plan with Mashvisor.
Click on More Filters and scroll down and select the Foreclosure filter:
Now, the map will show you only the New York foreclosures for sale. You can also choose among a variety of other investment property search filters including:
- Number of bedrooms/bathrooms
- Year built
- Square feet
- Traditional and Airbnb rental income
- Investment property type
So, for example, if you wanted to find multi family foreclosures in New York City, you could also select the multi family filter to see these properties for sale.
Now that we know where to find foreclosed homes for sale in New York City, it’s time to perform a neighborhood analysis. Click on the Explore Data button on the map (as pictured above). You’ll have a few different filters which you can use to find the best neighborhoods in New York City with foreclosed homes for sale:
- Listing price
- Airbnb cash on cash return
- Traditional cash on cash return
- Airbnb rental income
- Traditional rental income
- Airbnb occupancy rate
If you’re looking for a foreclosure home to rent out traditionally, then select the traditional cash on cash return filter to find the areas with the top-performing long-term rentals. These will be the ones highlighted in green:
Follow the same logic for the other filters. Areas with higher values for the selected filter will be highlighted in green and those with lower values will show up in red.
Step #4: Identify a Few Potential Foreclosed Homes for Sale
Now that you can see where the best neighborhoods are based on your search criteria, it’s time to find foreclosed homes in these areas that promise a good return on investment. If you look on the right-hand side of Mashvisor’s Real Estate Heatmap Analysis Tool, you’ll see all the foreclosures for sale (pictured above). You’ll also get a quick investment property analysis for each which includes:
- Listing price
- Traditional cash on cash return
- Airbnb cash on cash return
You can also organize the bank foreclosed home listings using different filters by clicking Sort By. Click on a few promising foreclosed homes for sale (those with good cash on cash return in your budget). Now, it’s time to analyze them.
Step #5: Analyze the Foreclosed Homes
If you were planning on flipping the foreclosed home, your real estate investment analysis would consist of figuring out the cost of repairs, the after repair value, as well as holding costs.
When it comes to rental property analysis, however, there are a lot of different property metrics you’ll have to look at. Because you want to take the easiest route of finding foreclosed homes that will perform well, it’s best to carry out investment property analysis using a real estate investment calculator like Mashvisor’s.
If you’re following along with this guide on how to find foreclosed homes using Mashvisor and you clicked on some of the promising properties as mentioned above, you’ll get access to our calculator. Using this real estate investment tool, you’ll be able to quickly and easily analyze foreclosures for sale based on the following metrics:
- Traditional and Airbnb rental income
- Rental property expenses
- Traditional and Airbnb cash flow
- Traditional and Airbnb cap rate
- Traditional and Airbnb cash on cash return
- Traditional and Airbnb occupancy rate
Here is what the investment property analysis for a foreclosure in NYC looks like:
This kind of foreclosure rental data will help you quickly determine which investment property for sale will make you the most money as a rental property. And you’ll also be able to factor in your financing (if you’re using a mortgage) using the mortgage calculator.
Step #6: Carry Out a Comparative Market Analysis
The last step of finding foreclosed homes is to make sure to carry out comparative market analysis (CMA). You want to make sure that you’ve found a foreclosed home that is actually a good real estate deal. If it’s priced at market value or even better, below market value, you’ve got a good deal in front of you. If it’s overpriced, then move on. A CMA will help you determine this. You will need to find a few real estate comps for the foreclosed home for sale that you’re interested in. (Mashvisor can also provide you with these.) Compare their prices to the listing price and see if it’s in the range. For more on how to do a CMA, read Comparative Market Analysis: A How-To Guide for Real Estate Investors.
Find the Best Deals on Foreclosed Homes Now
As you can see, there is actually a lot more to finding foreclosed homes than you may have expected. It’s not as simple as searching in your area for foreclosures or even online for listings. It requires an in-depth analysis. This is the only way to ensure you purchase foreclosed homes that will be profitable.
Ready to get your hands on the best foreclosed homes in the US? Sign up for a 7-Day Free Trial with Mashvisor now.
Found the best deal on a foreclosure using Mashvisor? Take the next step and buy it! Here’s our guide on How to Buy a Foreclosure in 5 Easy Steps.