Whether you are looking for a home for yourself or for an investment property, a foreclosed home is a great deal for you. However, the problem for most people is having no money to start with. Therefore, here is our guide on how to buy foreclosed homes with no money.
The fact that you are reading this blog allows us to safely assume that you are new to the concept of foreclosed homes. There is nothing for you to worry about! Here is your guide on how to buy foreclosed homes with no money.
Related: Buying a Foreclosed Home? Here’s What You Need to Know
How to buy foreclosed homes with no money: What is a foreclosed home?
First things come first. It is important that you understand the idea of foreclosure before you learn how to buy foreclosed homes with no money. So, foreclosure is a legal procedure regarding homeowners who fail to pay the mortgage. Basically, the bank evicts the property and puts it for sale for less than its market value. Now, whether you are a real estate investor or an ordinary person looking for a place to live in, foreclosed homes are a great deal. You get to buy the property for a cheaper price than its original worth although foreclosed properties are not necessarily considerably cheaper. Some properties sell with a slight difference in price, so make sure you understand that.
How to buy foreclosed homes with no money: How to finance the purchase?
The best thing about real estate investing is the myriad of financing strategies available for real estate investors. Sure enough, funding a foreclosed home is just the same as funding any other property. If you do not have the cash to buy the real estate property, you can always stick to the same financing methods of financing any other property. So, here are some of the most common property financing strategies:
Mortgage: Obviously, a mortgage is the most popular form of real estate property financing. You can apply for one as long as you are qualified. So, make sure you find the best lenders as well as check their terms and conditions. For this, of course, you will have to prepare a down payment as most lenders require one.
Borrow: You can also choose a traditional property financing strategy which is borrowing the money. Check with your family, friends, or even colleagues and see if they can lend you the money. Borrowing the money might be one of the best ways to go about financing a foreclosed home. Unlike other forms of financing, private money borrowing is more flexible due to your personal relationship with the lender.
Partner up: If you want to avoid getting into debt, then co-investing is the perfect solution. Real estate partnerships allow you to do exactly that. In return for the money your partner invests, you will have to do the work. In other words, you will be the one who provides knowledge, experience, and the deals.
How to buy foreclosed homes with no money: What are the methods of buying foreclosed homes?
Buying a foreclosed property through the bank: Buying a foreclosed property through the bank is one way to go about buying a foreclosed home. This is one of the most preferred methods. Besides, the bank always hires a real estate agent who specializes in foreclosed homes for sale. So, you might benefit from that as well.
Buying a foreclosed property through an auction: Yet another way of how to buy foreclosed homes with no money is at an auction. You can always choose to attend foreclosure auctions. However, you must know that if others have cash on hand, they might have better chances of getting the real estate property. Another downside is that you do not get to see the property beforehand and inspect it.
Buying a foreclosed property directly from the owner: You can choose to buy the property directly from its owner. However, you should keep in mind that it works best when you have cash on hand. This is because most owners of foreclosed homes prefer to sell to those who have the money on hand.
How to buy foreclosed homes with no money: What should you keep in mind?
If you are buying a foreclosed property for investment purposes, then profit is your goal. Therefore, you should not be thinking “How to buy foreclosed homes with no money“, but instead “Are they worth it?”.
Making money in real estate means that you purchase profitable investment properties that generate cash flow by receiving high rental income and requiring few costs. For this, you will need to perform investment property analysis as well as real estate market analysis. The best way to do so is to use an investment property calculator. It will help you perform all the important calculations that determine the worthiness of an investment property.
Related: How Do You Conduct Property Valuation for Real Estate Investing?
Another thing to consider is the repair costs. Foreclosed homes usually come in a distressed situation. It could be anything from electricity, through water systems, all the way to the garden or even a light bulb. These all add up to the property expenses, and you have to take them into consideration when performing investment property analysis. Therefore, make sure you inspect the investment property before purchasing it, so you could estimate the repair expenses beforehand.
Related: The Pros and Cons of Buying a Foreclosure
How to buy foreclosed homes with no money: What is the procedure?
The procedure of buying a foreclosed property is simple (not easy, though). First, decide what financing strategy you want to use. Then, you will need to hire a real estate agent. It is best for you to do so because most real estate agents know about foreclosed properties even before they are listed. Finally, you can proceed with the process of finding a foreclosed home.
How to buy foreclosed homes with no money: Summary
All in all, a foreclosed property is a great opportunity whether it is for investment purposes or not. It only takes making the right decisions based on your circumstances. Financing a foreclosed home, however, is not that hard. You can always go with the traditional ways of financing a real estate property. So, if you are looking to learn about real estate in general and real estate investing in specific, make Mashvisor your guide.
