Here’s what you need to know first!
As a residential real estate investor, it is possible that you keep your eye on properties that are either going into foreclosure or that are already foreclosed upon and may still be purchased – oftentimes at a steep discount.
But, while some foreclosures can certainly offer the opportunity to pick up under-valued homes or condos for your rental property portfolio, the purchase price is only one of many components that are factored in when considering a potential buying opportunity.
According to a recent report through MarketWatch, foreclosure filings are up 132% in the U.S. as compared to just one year ago (March 2022 vs March 2021). This may not necessarily be surprising, given that over the past two years or so, many properties have been selling at or above their asking price to buyers who obtained mortgages with historically low interest rates, but who now may not be able to make the payments.
With that in mind, though, while active foreclosures are up year-over-year, the number of mortgage loans in default is still far below historic norms. One of the key drivers of this is the result of the CARES Act that was passed during the height of the COVID-19 pandemic and that helped many homeowners take advantage of forbearance – and in turn, come back to being current on their loans.
With that in mind, before you move forward with purchasing a foreclosure, it is essential that you know the true value of the property that you are considering, because you could end up paying far more for it than you should.
In fact, some experts believe that “with demand for homes [still] exceeding supply by so much, no one is going to get a foreclosure for a steal. Competing buyers are bidding up prices for all homes, including foreclosures.”
If you do end up expanding your rental property portfolio, though, and these homes or units are located in Central Florida, bringing an experienced property manager on board could help you with tenant management and day-to-day maintenance.
For more details on how a Central Florida property manager can help, give us a call and let’s set up a time to chat!
Foreclosure filings are up 132% from a year prior. Here’s what that means for the housing market (and it’s not what you might think). By Alisa Wolfson. Updated May 1, 2022. MarketWatch https://www.marketwatch.com/picks/foreclosure-filings-are-up-132-from-a-year-prior-heres-what-that-means-for-the-housing-market-and-its-not-what-you-might-think-11651351836?siteid=yhoof2&tesla=y