Foreclosed properties are real estate properties that have been taken over by the lender because the renter/owner of the property failed to make payments for a loan. Properties can also get foreclosed if a property owner failed to pay real property tax from the government.
Real estate bargainers buy and look out for foreclosed properties as much as they can. You can see these people in auctions and courthouses. Some people buy foreclosed properties, renovate them, and sell them for a better price. For people who want to have a house and lot, they buy a foreclosed house and lot because they think it’s cheaper.
Nowadays, finding foreclosed properties has never been easier because of the internet. Before considering the purchase of foreclosed properties, there are some things that you should consider.
Things to Consider Before Purchasing Foreclosed Properties
Additional Expenses
You might think that buying foreclosed properties is a cheaper option in acquiring real estate. However, you should know that there are additional costs in purchasing foreclosed properties. Aside from the reselling price, some of the payments you have to pay are associate dues, property taxes, and fees for property transfer.
Property Condition
There are foreclosed properties that are in bad condition, most of these are abandoned homes that were never paid for completely. In other cases, there are foreclosed homes that look great on the outside but have structural flaws on the inside. Unless you want to flip houses and sell them for a better price, you should carefully inspect a property’s condition.
Location
Whether you are buying a foreclosed property or a house and lot from a real estate developer, you should always consider its location before choosing. The location of the property determines its price, safety, and accessibility to basic services that is why this should matter most.
How to Find Foreclosed Properties
In the Philippines, the best way to find foreclosed properties is through going to banks, lending institutions, government financial institutions, and the National Housing Authority. These institutions are mostly the ones who offered loans to previous property owners before foreclosure. These institutions also have accredited brokers which means that you are in good hands.
Advantages of Buying Foreclosed Properties
Lower Prices
The most obvious advantage of having foreclosed properties is their price. Lenders are willing to sell their foreclosed properties at a lower price just to get rid of the property. Sometimes, these properties are not even in bad condition, the lenders just to have someone occupy the home. But of course, you should still check the property’s condition.
Some people buy two foreclosed properties instead of one traditional property for the same cost. These people are willing to work with the two properties and make something better out of them.
Better ROI Potential
If you purchase a foreclosed house and lot in good condition at a reasonably low price, you can have a greater return on investment. By making a few repairs, you can match the pricing of the houses in your potential neighborhood at a relatively low price. Then, you can rent the property with the same amount that other landlords charge.
Financing Options
Besides its relatively low price, there are foreclosed properties that have flexible financing options. Banks are more likely motivated to sell foreclosed properties to the point where they can even lower interest rates.
Disadvantages of Buying Foreclosed Properties
Repairs are Needed
The most notable disadvantage when it comes to foreclosed properties is the need for repairs. If the previous owner did not maintain their property, you will be shouldering all repair costs if you buy the property. The bank or lenders of the property will not offer any assistance when it comes to repairing the property.
You’ll Need Due Diligence
Before purchasing a foreclosed property, you should find all information that you can on the said property. You should know what happened to the property and how the previous owners took care of it. Besides the property, you should also research the property’s location and the kind of neighborhood it has.
In general, a neighborhood filled with foreclosed properties is a bad sign because it means that the people who live in this area can’t afford properties. And a person who can rather choose to live in an area that is secure and more protected.
Purchasing is Difficult
Unlike buying a traditional house and lot in the Philippines, buying a foreclosed house can be difficult because of the bank that owns the property. The processes involved are way different than the typical seller to buyer transaction. Also, there will be a lot of buyers on a foreclosed property because it is cheaper.
Weighing your Real Estate Options?
Pre-Selling vs. Foreclosed vs. Subdivided Lots
Is Owning a Foreclosed House and Lot a Good Investment?
If you are a real estate investor, then yes. Buying a foreclosed property and repairing it for its after-repair value is an excellent investment for passive income. However, if you are a homeowner looking for your next place of residence, you should consider the factors listed above if you wish to buy a foreclosed house and lot.
Yes, foreclosed lots are way cheaper than houses and lots you can buy from developers. However, what you should consider is the amount of time and effort that you need to have to make sure that the home is livable.
If you can find a foreclosed property that is well-maintained and is located in a safe and secure location, then you should grab the opportunity to purchase the property. It might be difficult to find one nut if you do, it would be one of the greatest purchases you will have in your life.
But if you want a safer option, you can buy foreclosed land then build your dream home around it. This way, you are going to have a discount when it comes to the lot and assurance that the house you’ll build is in good condition. Another safe option is to buy property from the best real estate developer in the Philippines.
If you want to have the best house and lot in the Philippines, look no further to Camella. Camella provides a home for every Filipino for 45 years. With its amenities and sense of community, you are making the best real estate investment for yourself and your family.
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