Is a Foreclosure Home a Good Investment?

Diversifying Your Rental Portfolio

Everyone loves a deal, and buying a rental property is no different. Whether it is a fixer-upper in your favorite neighborhood or a foreclosure that has been empty for years, we all know what it feels like to be swept up in the “good deal” frenzy. We also know what it feels like to come out on the other side and experience a big ol’ pile of Buyer’s Remorse.

When thinking about diversifying your rental portfolio with a foreclosure property, it is best to approach with caution. The lure of a good deal can make us all do silly things, so it is better to proceed with skepticism and facts.

Things to Consider Before Buying a Foreclosure

Can you view the home before purchasing it?

Buying a foreclosure home sight-unseen is a risky choice and something that we don’t recommend you do as a landlord. Seeing the property ahead of time is a must so that you can check for potential issues and get familiar with the home. When viewing the home, get a better understanding of…

  • The neighborhood and feel of the home
  • What work needs to be done both inside and outside?
  • A ballpark estimate on the amount of money needed upfront to fix the home
  • How much can you charge for rent each month?
  • Does that amount of rent offset the maintenance and repairs?
  • Does the investment make sense financially and from a time perspective?

How long has the property been empty? What is the history of the home?

A property that has been left unattended can have unforeseen problems. From a decaying infrastructure to a leaking roof, buying a home that has been abandoned may have dire consequences and become a money trap. Make sure to know as much as possible about the home’s history before you think about purchasing the property. Make sure to inquire about the Seller’s Property Disclosure Statement and research the previous owners while trying to piece together the history of the home.

How extensive are the repairs? Can you have the home inspected before purchasing?

We have all seen the HGTV episode where the couple buys a foreclosure, and everything goes wrong the minute they walk through the front door. From black mold under the sink to a completely gutted interior, it is best to know what you are buying and not end up like the horror stories on TV. Yes, a foreclosure will need repairs and upfront money to make it livable, but it is good to have an idea of what you will be undertaking before you start the negotiation. One way to do this is to bring an experienced home inspector to view the home. A skilled individual in the business will be able to look for plumbing issues, conduct an electrical check on the property, and look for signs of decay/rot/cracks/leaks.

Are there any rules you need to know before purchasing?

When purchasing a foreclosure, it is best to know if there are any strings attached. Things such as:

  • Are you buying the home through a 3rd party?
  • Are there any rules that come with buying the home?
  • Are there current tenants? Will they be staying or leaving?
  • Are there any liens on the home?

Once you have all the answers to these types of questions (and feel comfortable about the purchase), feel free to buy the property and start the process of making some money off the home.

Want to read more about the foreclosure process, take a look at the following blog

Need help?

At Oak City Properties, we have been helping those in the Raleigh area purchase homes for years! Our full-service property management company will help you find and buy new rental properties to grow and diversify your portfolio. We will also market the property, locate prospective tenants, and show the home to qualified applicants. Once a tenant is placed in your rental property, we will: collect rent payments, assess and collect late payment fees, provide 24/7 maintenance, help with accounting/tax services, and deal with any court appearances in the event of an eviction.

If you are interested in learning more, give us a call at (919)-232-9222 or check out our website:

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