Foreclosure homes present a rare opportunity to investors. When a home is foreclosed it is normally sold for the absolute minimum price that the bank or lender requires to receive their money back from the debt owing. In some situations this can be well below market value and certainly way below the value of the home when it was originally bought. Whilst foreclosing on a home is very sad and stressful for home owners, investors can find some great bargains and perhaps even make the lives of home owners easier by offering to rent the home to them at a cost that is lower than their mortgage payments – this results in a win-win situation for both parties.

The main benefit of buying foreclosure homes is of course the fact that you are buying at such a low price, and in future there is the chance that your home will drastically increase in value. Because of the large number of property foreclosures currently available, it may be some time until market values rebound but when they do, the price you paid for a foreclosed home will seem miniscule. In some cases people are paying 50% below the former market value for a property. When you consider that property prices generally double every 10 years, this presents a bonanza for investors.

The more foreclosure homes you can afford to buy, the better. If you are a seasoned investor and have a good rapport with your lender or bank then it is likely they will not mind lending you money to buy more properties. If they know you are an experienced investor then you may not suffer the fate of many other people who are currently struggling to get a loan approved due to the current financial uncertainty. Ideally you will want to buy as many foreclosed homes as possible to grow your portfolio while prices are low.

A good strategy is to invest in different cities rather than just one location. This spreads your portfolio out and protects you against any unforeseen circumstances, such as if values don’t rise in one city but do in others.

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