5 Steps to Buying a Foreclosed Home To Rent Out

5 Steps to Buying a Foreclosed Home To Rent Out

Excalibur Homes
Excalibur Homes

5 Steps to Buying a Foreclosed Home To Rent Out

Typically, homes go through foreclosure when the homeowner is not able to pay their mortgage. Therefore, these homes aren’t always as beat-up as you might think, and you’re likely to get the home for less than the current market value. This makes it a more affordable option for investors looking to get into the field of real estate investing. However, before you begin the flipping process, you need to learn the five steps to buying a foreclosed home to rent out.

Work With an Expert

You can either work with the bank’s real estate agent or a buyer’s agent. While a buyer’s agent will cost you a commission fee, they are more likely to represent your interests and find a foreclosed home that meets your specifications.

Either way, you need someone experienced to help you navigate the field and find the right place for you. Look for an agent that has either a Short Sales and Foreclosure Resource (SFR) or Certified Distressed Property Expert (CDPE) certification.

Locate Foreclosed Homes for Sale

If you work with an agent, they can help you find a foreclosed home. You can also find plenty of foreclosed homes for sale at real estate auctions—just be prepared to bid high and fast. You can also buy a foreclosed home directly from the owner, the bank, or the government. Most lenders post bank-owned properties on separate websites, as does the US Department of Housing and Urban Development.

Run a Comparative Market Analysis

If you work with an agent, they can also help you run a comparative market analysis (CMA). Running a CMA helps you look at a group of comparable properties to help you find the best deal. This analysis also gives you a competitive edge, so if you’re up against other offers, you can make the most cost-effective yet aggressive one.

Obtain a Mortgage Preapproval Letter

While foreclosed homes are relatively inexpensive, they still cost a pretty penny, which means it’s unlikely you’ll be able to pay for them upfront with cash. To help you stand out from other buyers and demonstrate your intent, you should get a mortgage preapproval letter. Essentially, a mortgage preapproval letter is a document from a lender that says they’re willing to lend you a specified amount before actually lending it to you.

Get a Home Inspection

Having a professional perform a home inspection is arguably one of the most important steps to buying a foreclosed home to rent out. Typically, foreclosed homes are sold as-is, which means the seller won’t be able to ensure the property is in the best condition. Before you make the final decision, hire a home inspector to take a look at the home. They can pinpoint structural issues, damage, and any repairs that need to be made. This way, you know if you’re getting too in over your head before you buy.

Have you successfully bought and rented out a foreclosed home? Do you need assistance managing and leasing your property? Let Excalibur Homes help! We’re an Atlanta property management company that can help make owning and managing a rental property a breeze.

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