As a recent college graduate, how difficult is it to purchase a foreclosed home? Then renovate and sell it for a profit, in today's economy?

Asked by Camilla, Freeport, NY Wed Jun 9, 2010

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9
Laud, , Fitchburg, WI
Thu Jun 10, 2010
Turn off the HGTV. Go get a job. Flipping foreclosures is best left to professionals who have already been bankrupt once and know their way around the court system.

Just BUYING a foreclosed house is enough to turn most people into blubbering puddles of frustration.

SELLING a house is difficult these days, from what I hear.

Renovating a house is frequently cited as a cause for divorce and over-consumption of prescription meds.

But, if you have cash, time & patience, a huge appetite for risk, no qualms about betting the farm on an iffy outcome, carpentry/plumbing/electrical skills and the ability to defy gravity: GO FOR IT.

Oddly, more houses than one might think go thru foreclosure more than once. The first foreclosure buyer thought they were getting a "Deal" only to discover they had a tiger by the tail.

You might consider consider farming if you want to work hard for no money. At least then you don't have to live in an icky foreclosed house. Plenty of professionals who have been doing this while you were in college are finding other ways to make money these days while the banks foreclose on their latest 'project' a second time.
1 vote
David Chiles, Other Pro, Los Angeles, CA
Sat Jul 3, 2010
Thank you for your question Cami. Renovating a home and selling it for a profit, also known as 'flipping,' is not happening as much in today's market because there has been little appreciation in the market.

The Foreclosure process starts when a homeowner cannot pay the mortgage and ends when the home is resold.

The three stages of Foreclosure are: Pre-Foreclosure, Auction, and REO/Bank Owned.

Pre-Foreclosure is the time period a homeowner has to repay the delinquent amount of the mortgage.

If a homeowner does not pay the mortgage the home is auctioned

If the bids do not meet the reserve the lien holder (bank) reclaims the property and it becomes a Bank Owned REO.
0 votes
Paula Bailey, Agent, Freeport, NY
Tue Jun 29, 2010
Hi Cami,
If you find a competent mortgage broker he/she can walk you through the process of obtaining a loan to purchase the property and do the necessary repairs. My brother is a mortgage banker and he helps my clients with these matters. Not all foreclosed homes need renovations; I have helped my clients to locate REO's and short sales that need little to no repair. Buying and flipping is not your only option. Please call me if you would like to discuss this further 516-320-6434. I am an attorney and a broker and I have clients who are also breaking in to the real estate market.
0 votes
Yolanda C, , Freeport, NY
Thu Jun 10, 2010
I work with Real Estate investors who purchase these deals with cash. They flip the home to make a profit of course. A lot of the times the properties are still a bargain. If you are interested in buying a home with some equity, it is possible. Feel free to contact me or check out http://www.yolanda.listingbook.com for a FREE account for your real estate needs.
0 votes
Dan Chase, Home Buyer, Texas City, TX
Wed Jun 9, 2010
If the average house takes 5 months to sell, how will you make payments for that long? Some houses have been for sale for well over a year. Could you keep the house that long if needed?

It sounds good, but the carrying costs could make it impossible.
0 votes
Allen Bauman, Agent, New York, NY
Wed Jun 9, 2010
Hi Cami

It doesn't matter if you are a recent college grad or any age(generally above 18) in this kingdom cash is king. Or you must live in a kingdom where you can get cash and be a prince for a while. Giving you a short answer is not really possible since there are so many things involved in wanting to flip homes to actually doing it. If you watch late night TV you can see how many books are written on the subject.
The reason cash almost always comes up as a topic is because most properties that are foreclosures have some (or much) work that needs to be done. This generally rules out being able to get a mortgage. The FHA does have an investor program but it doesn't work for every property. That leaves either having your own money, a friend or relatives money or hard money.
I work with investors looking to buy and flip homes. They find that the information I give them and keeping them out of trouble is worth more than the search for investment properties. Please call or email me with your contact information and we can talk about it.

Allen Bauman
Century21 Yve R. E.
Licensed R. E. Agent
NYS Certified Residential Appraiser
516-791-3846
allen.bauman@gmail.com
0 votes
Lynn Pisani, Agent, Garden City, NY
Wed Jun 9, 2010
Cami, As long as you have money and good Fico credit scores it doesn't matter what age you are when buying a property. Since it is a banked owned property, you must be prequalified by the lender and show proof of funds to the bank. A foreclosed home is usually in need of extensive repairs which might require a 203k loan where the repairs are factored into the loan mandated by the bank. This type of loan is necessary when the house has been winterized and all the electric and plumbing have been shut off. A 203k loan is often required inorder for the bank to do an appraisal. A quick flip of a house today is not so easy but is doable with the right plans.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Wed Jun 9, 2010
Much will depend on your finances, and exactly how much work the property will need--most do need extensive repairs, how quickly can any repairs can be made, etc.--If you haven't done so yet, visit with any qualified loan officer(s) first, see if you qualify for a loan, how much, etc. then make your determination.
0 votes
Wendy Smith, Agent, Crystal Beach, FL
Wed Jun 9, 2010
Whether a college graduate or not, the first step of course is buying the property - you need cash or a mortgage. Mortgages for investors are harder to find these days but not impossible. Mortgages on "beat-up" properties present another challenge. After getting past the aquisition, then comes the fix up - more out of pocket cash. Finally, the house is back on the market. It's still a buyer's market in many parts of the country - especially with your first fix n flip, you should have the help of a Realtor experienced in this niche.
0 votes
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