Foreclosures

Over the course of this tumultuous year, I’ve received a number of inquiries about foreclosures. Searching for good value makes sense, but actual success with this strategy can be challenging. For example, if someone is falling behind on their mortgage, lenders are generally willing to work with them on their payments, as they would prefer to not deal with the house. For someone hoping to find a deal, even identifying the representatives of a property or how to make an offer can be surprisingly time-consuming. For a property to work through the stages of foreclosure and come to auction or available for purchase can take years. In many cases, whomever might have been living there have vacated long before this point, allowing the house to be without maintenance or care for an extended period. A house without electricity and without heat over a cold winter can easily lead to burst pipes and and an assortment of issues. It’s shocking how quickly trees can reclaim porches and decks, if not also tearing apart sidewalks and concrete foundations.

The key takeaway here is that while there are certainly diamonds-in-the-rough, more often than not, foreclosures are very costly to rehabilitate. Anyone looking for an investment opportunity should be prepared to make a significant investment in systems and upgrade costs. Likewise, they should be prepared to spend considerable time in the process, as these transactions are not as simple as a typical residential purchase.