Buying Foreclosures?

Serendipity
Serendipity Posts: 6,975
edited May 2011 in The Clubhouse
Hi,

One of my neighbors who is also very handy recently bought a house and is remodeling it himself. He got a great deal on it and is almost finished with the renovations. So I was thinking, is it a good idea to buy foreclosed homes and fix them up as a "project home?" I am pretty handy with home renovations and would consider refurbishing / remodeling a foreclosed home sometime in the near future.

Is buying foreclosed homes a good idea? This would be in the NYC Metro Area (Long Island and the Outer Boroughs included, along with Westchester County and maybe White Plains or Scarsdale). I looked at some homes in White Plains and the area is real nice. There are many homes I could see myself fixing up and worst comes to worst, renting out after the renovations are done.

Also, this would be a cash only deal and no mortgage. I would like to do this with my Mother / Father as a weekend project and learn a few things along the way. Some of you have seen my work, I enjoy working on homes and would be lots of fun on the weekends!
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Comments

  • Rivrrat
    Rivrrat Posts: 2,101
    edited May 2011
    I have done it, and it turned out to be a good deal for me. I'd look for a house that doesn't need a lot of work other than cosmetic, structural work add up in a hurry.

    In this market, don't plan on flipping it quickly for a huge profit. If you do it, it'll probably be a long term investment.
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  • txcoastal1
    txcoastal1 Posts: 13,271
    edited May 2011
    Rat is correct about flipping at this time and about making sure other than flooring, paint, and aethetics. Rentals in some areas are nice investment at this time. Lot's of people had to cut back and sell or lose there own homes unfortunatly putting them back into renters market. You also need to check each area for number of listings for rent/or sell and make sure it is not saturated
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  • Serendipity
    Serendipity Posts: 6,975
    edited May 2011
    Rivrrat wrote: »
    In this market, don't plan on flipping it quickly for a huge profit. If you do it, it'll probably be a long term investment.

    Never planned on doing so from the start. Would be a long term investment, as I understand flipping a home quickly for a profit is not a good idea (at least in today's market).

    This would just be a second home / fixer-upper. I understand some areas have radon problems, water problems, etc. and therefore lots of homes in the area are for sale. So it's definitely important to do as much research about the area as possible and never make impulse decisions.

    I saw a nice home in Putnam County on a lake, with unfinished basement that would be great for a NICE home theater. Would be great for weekends to get away from the city.
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  • Rivrrat
    Rivrrat Posts: 2,101
    edited May 2011
    If you're looking for a second home fixer upper, this would be the time.

    Or, you could just buy an entire block or two in Detroit and become a land baron. :wink:
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  • txcoastal1
    txcoastal1 Posts: 13,271
    edited May 2011
    If you are planning on doing any thing like this its the time to do it, especially something where the family can help with the muscle....lake or get away stuff sounds great

    buyers market is now...good luck
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  • cstmar01
    cstmar01 Posts: 4,424
    edited May 2011
    Well a few words regarding REO properties. You will sometimes get what you pay for. IE if you put in a super low bid and they accept right away, may not be a good sign. Always do an inspection of the property etc. REO's are good if you know how to deal. Normally a lot of counteroffers and going back and forth.

    Can you get a lot of house for cheap? yes. Can you get a pile of crap for cheap? Yes. Also use a realtor (if you use one) that knows REO's, SS, etc and how they work. They can serve as a great reference in terms of knowing what banks have, possibly are going to be taking back and will be putting on the market and can deal with the bank so you don't have to (trust me sometimes its not fun).

    PS watch out for things too such as back taxes, water bills, electric bills etc. These can be owed often and not paid by the bank so you will have to pay for it yourself. Also banks like the less work they have to do. Such as if you put in an offer say close in 30 days, no inspection, as-is. They would like that vs close pending inspection blah blah blah. Also the smaller the bank the more likely it can go a bit faster as they won't have as much inventory to deal with. The larger the bank the longer the delay in buying it, and the more waiting on your end.
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  • txcoastal1
    txcoastal1 Posts: 13,271
    edited May 2011
    cstmaro1 There is always a deal out there not always crap I bought a foreclosure that I am living in at 60k below market value that cost me 20k to bring up to 70k over what i paid for the home...
    it was damaged by hurricane Ike that was 2 years ago...now there is a home with the same floor plan that someone is vacating and needs a quick sale...there is several homes in my neighborhood 50-70k above his asking price at fair market value...but he wants to sell...because there was no damage just upgrades which I can do to his home and bring it up to par with mine for 7-8k....we are talking about 6yr old 3300-3800sq ft homes
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  • VR3
    VR3 Posts: 28,611
    edited May 2011
    Been doing just this for 2 years now...

    Would I do it again - honestly not sure. It has been an adventure - granted mine was not a foreclosure just an old house...
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  • txcoastal1
    txcoastal1 Posts: 13,271
    edited May 2011
    Vr3MxStyler2k3 wrote: »
    Been doing just this for 2 years now...

    Would I do it again - honestly not sure. It has been an adventure - granted mine was not a foreclosure just an old house...

    You have put your intersts into audio....by the way great reads between you and the ones who reply

    It takes an energy to dedicate and go for it attitude...you probably have yourself in a 1 step at time hich is great when you can
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    Gone to new homes: (Matt Polk's)Threshold Stasis SA12e monoblocks, Pass XA30.5 amp, Usher MD2 speakers, Dynaudio C4 platinum speakers, Modwright LS100 (voltz), Simaudio 780D DAC

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  • VR3
    VR3 Posts: 28,611
    edited May 2011
    lol - I have been into audio non step for 10 years now - I just got the mod bug here recently...

    The problem is we gutted 7/8 of the house - the only room that was not fully gutted was the den, the kitchen was pretty close to gutted and everything else was down to the studs...

    Found termite damage (had to rebuild the back of the house) - dug 400 ft of trench (still working on this) to fix a standing water problem...

    Top of that just lots of other crap to do... LOL

    Houses are ALOT of work!

    Thanks for the compliments on the threads - its fun!
    - Not Tom ::::::: Any system can play Diana Krall. Only the best can play Limp Bizkit.
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  • Bobsama
    Bobsama Posts: 526
    edited May 2011
    Make sure you get the title free and clear. Don't look just at NYC; other markets may provide a significant return in future years. People have a 5-year memory and real estate is a 10-year cycle.
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  • inspiredsports
    inspiredsports Posts: 5,501
    edited May 2011
    Not to be a downer, but I truly wonder if old cyclical trends will repeat.

    I just read a statistic (in Smart Money I think) that said the generation currently in college will be the first in 100 years to have a lower standard of living than the preceding generation.

    Good incomes, and especially money available to be borrowed are key, and looking forward the outlook is not so great for either.
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  • VR3
    VR3 Posts: 28,611
    edited May 2011
    I was watching a movie and there was a quote that made me giggle but unfortunately it may be true

    We are the NINJA nation

    No Income, No Job, No Assets
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