It looks like a deal, but is that home really the best choice as an investment? A bank-owned property has failed to sell in a foreclosure auction and has reverted to the lender. Some of these properties are gems, while others are not the deal you imagine.

1. Is the Property a Deal?

You dream of finding a gem in a great neighborhood, giving it some TLC, and using it as a rental property investment. However, before you purchase a bank-owned home, realize that not all bank-owned properties are gems in the rough. Some of them are actually relatively expensive since the banks want to make money from the deal. Compare the asking price for the home to the asking price for other comparable homes in the area. Make sure that you understand the repairs that are required and work them into the equation as well. It may be that you’ve found a property that is a good price, in sound condition, and will rent easily. Then again, there could be a reason that no one has snapped up this property.

Seattle houses
Is your property choice a star or a dud?

2. Consider the Repairs and Updates the Property Needs

A bank-owned home may have been vacant for some time, and before that, the owners probably were unable to invest a lot of money in its upkeep. In the best case scenario, there may be only cosmetic maintenance concerns to tackle. If the shrubs need to be shaped and the stairs need a few treads replaced, those are small items that require very little financial investment. However, if there are structural problems or serious damage such as water damage from unattended leaks, you could be looking at tens of thousands of dollars in work. Are you ready to take on that commitment of money and time? You can request to inspect bank-owned properties before you close the deal with the bank. Take advantage of this opportunity and get a list of renovations you’ll need to make so that you can decide if this property is the right investment for you.

3. Where is the Property Located?

Any time you consider an investment property, you need to look at the location. Is it close to transportation? What is the neighborhood like? A bank-owned property could be in a neighborhood with excellent schools, parks, and recreation centers, or it could be in a neighborhood that’s too far from downtown, without a lot of amenities, and surrounded by homes that are in poor condition. Look at the history of the neighborhood and how it’s changing. Even if the neighborhood doesn’t look promising right now, a house in a neighborhood that’s just beginning to get popular could be an excellent investment.

4. Are There Any Extra Logistics You’ll Need to Manage?

If you’ve invested in property before, you know that there are logistics to cover when you’re organizing a purchase. In many ways, those logistics are simpler when the bank owns the property. When you buy a vacant property, you don’t need to work around homeowners’ showing schedules or tenants who don’t want to leave. The bank wants to sell, so it’s unlikely that they’ll turn their backs on the deal. If there are outstanding taxes on the home, the bank will likely throw in these tax payments to seal the deal.

If you have property investments, investing in a property manager can be the best way to ensure that the property will be maintained and that there will be shorter vacancy cycles. With Lori Gill and Associates, you can be sure that your properties are in good hands. Step back and enjoy the return on your investment: contact us today.