Realizing Your Profits in Foreclosure Investment
Renovating and repairing the property to maximize its value
The most obvious way to cash out a sizable profit is to renovate and repair the property and then put it back on the marketplace in the shortest possible time and everybody know that time is of the essence, because each day you hold a house, it costs you -in monthly expenses (if you financed the purchase), insurance, property taxes, and utilities.
The trick to renovating and repairing a property effectively is to develop a good plan well in advance and improve the house only enough to meet the going price. Transforming a $100,000 property into a $150,000 house in a neighborhood where most houses sell for around $80,000 is a big mistake. If buyers need a $150,000 house, they look into a $150,000 neighborhood.
Marketing and selling the property to get top dollar
Your goal when selling a property is to sell it immediately at a price that is pretty comparable to its market price. To achieve that goal, apply these marketing rules of thumb:
- Set the price correctly the first time. Never set a super-high price wishing that a huge fish will bite. An investment property is probably to linger on the marketplace, during which time, holding costs will consistently chip away at your current profit. An asking price that is in line with equally priced houses is best.
- Get the word out effectively through real estate agents. If you are thinking of saving money by selling the property yourself, think again. Houses sell in less time and for more profit through a real estate agent. The money that you may save in commissions, you end up lose them in holding costs and by having to sell the house for a lower price.
- Begin marketing campaign as soon as you assume possession. Marketing begins when you start your renovations, particularly if you begin renovating the house exterior first. Neighbors observe and begin to talk about your house, and word-of mouth advertising starts to take off.
- Put a For Sale sign on the lawn when renovations and repairs are nearing completion. The For Sale sign takes away all doubt that the property is for sale.
- Arrange the house impeccably. Scrub and clean inside and out, refurbish the landscape, mow the lawn, remove the clutter, tastefully decorate and furnish the interior, arrange some pretty flowers bouquet flowers, and let the prospective buyers stream in.
When you buy a house for less than its market price, you automatically obtain equity in the house. Renovations to bring the house up to its market price, add more value and equity.
You may cash out your equity by refinancing it higher than you paid for it to materialize your profit almost instantly. Keep in mind, however, that if you want to refinance for more than the buying price, you take on a bigger mortgage and the inflated interest rate chips away at your overall profit over time. Properly executed refinancing does, however, offer you with capital to pay for additional renovations or to fuel your next investment.Refinancing and selling are two of the fastest and most obvious ways to gain the profit significantly from foreclosures, but other tactics are also applicable:
- Negotiate for a short sale.
- Lease the house.
- Sell the house to the homeowner's friends and family members.
- Sell your role on the house to another lien holder.