Investing In REO Property Is a Good Idea- By: Karim El Sheikh
Along with foreclosures, Real Estate-Owned (REO) properties are the next big thing among investors. An easier transaction and other benefits continue to attract seasoned veterans and newbie investors alike. What other factors make this a lucrative investment?
Bargains with REO Properties
Properties that are rejected after a foreclosure auction are automatically reverted to the bank or the lender. This is the reason they are called real estate-owned properties. These non-performing assets are essentially big money pits when they sit vacant, which is the reason lenders want to get rid of them quickly.
To do this, lenders sell REO properties at a much lower price than the property’s real market value. All normal claims associated with property sales are exempt, too. The result is an asking price far less than the market value, which means a wide profit margin for investors.
Many people make the mistake of thinking that foreclosures and REO properties are the same. However, this idea is wrong considering the very nature of such properties. A foreclosure happens when the owner defaults on mortgage payments at which point the lender takes over and sells it at a real estate auction. If this sale fails, the foreclosed property becomes REO.
Making More by Buying Less
Lenders are eager to recover from losses with REO properties. To make sure that these properties sell, they offer them at much lower prices compared to the property’s market value. REO properties are always in a hurry to be sold to avoid further losses.
With the sheer number of such properties, it is not surprising to know that some banks hold entire portfolios full of REO properties. Like other commodities, buying bulk REO properties could result in even more savings for investors. Developers and even individual homeowners can also benefit from REO homes. Owning a house is a part of town usually marked with high prices is now possible.
Unlike foreclosures, the lender will be responsible for renovations and repairs needed around the property. This not only makes the property look more attractive, but eliminates headaches once you are the lucky new owner.
Ready for Occupancy
REO homes also hold an advantage over foreclosures because the lender already takes care of the eviction. What’s more, all related problems should be handled by the lender, too. Unlike foreclosed properties, REOs may be inspected by investors and buyers. Any flaws may be pointed out and resolved before the property sells.
Once you buy the property, you are ready to move in at your own pace. No more waits and hassles that prevent you from enjoying your new home or investment. Buying or investing in REO properties is a relatively hassle-free experience compared to “traditional” transactions.
A Good Idea
If you are in the market for a new home or an investment, do consider REO properties for your portfolio. Ask your agent to go over REO property listings from lenders and other sources and provide assistance along the way.
All in all, buying REO properties is a good choice for both prospective homeowners and investors.
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Foreclosure.com is one of the first online resources to provide foreclosure listings online. Search nationwide for all foreclosure properties available.