Six Risks of Buying Foreclosures Part 3. The interests rates that you have to pay for your loan.
Oh boy !
We all know that the interest rate on the loan can trigger some interest in a new loan for any old financing project.
It's been said that interest rates on investment properties are usually higher than the rates given to an owner operator in a commercial transaction or a homebuyer who intends to assume residency on the property of which they're trying to secure the loan.
If the business owner of the commercial property secures the loan the bank believes that less risk is involved because of the owner interaction with the parcel or parcels of real estate.
In the case of an investor purchasing small parcels of land or foreclosed homes with a credit card, these transactions average 7.9 to 11.0 percentile.
Working with the bank to establish a maximum bid would assist you and prepare you for your offer at auction.
The bank can't loan you the money after you've been awarded a successful bid unless the bank approves the loan for the amount of the bid.
If the bid amount exceeds your line of credit with your lending institution your bid will be disqualified.
Discuss the foreclosure with a banking official and research it carefully before you bid on it.
Six Risks Part 2.The Future Value of the Neighborhood
What good is the neighborhood if dead pit bull dogs are all over the place?
It's very important that the neighborhood be kept clean and sanitary.
Memphis was voted the cleanest city in the nation by area civic organization many times until the garbage strike of 1968.
But the real estate values have remained constant.
Citizens have never had better trash collections in 40 years.
I've always been in favor of equipping the city with garbage trucks that have floral designs decorating the cab and the utility garbage compactor.
What kind of issues do you see creating a market slump?
Part 1.The Physical Condition
Why wouldn't you want to know if there was something wrong with the property?
It's up to you to find out if there are termites in the floors or if the backyard is covered with poison ivy before you start raising your fan with your auction number printed on it.
Know the condition of the property well ahead of the auction schedule.
There are six risks:
1. The physical condition of the property.
2. The future value of the neighborhood.
3. The interests rates that you have to pay for your loan.
4. The rental rates you have to worry about charging your tenants.
5. Whether of not the property is marketable and has liquidity.
6. Events that are going to take place in the future.
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"Owning a home should never have to be a dream. The responsibility of every real estate agent is to make home ownership a reality." David Saks - Broker
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