Foreclosure Investing - How To Find Great Properties

Foreclosure investing is about more than locating a discounted property and then turning around to sell it at a great profit. It’s more about knowing where and what to buy. Good investors can recognize a good deal, while great investors can see a good deal plus opportunity. But, how is it done, how do you develop a “good eye” for real estate investing? Keep reading to find out.

1. Location is Key

It’s hard to move a plot of land, so location is one of the prime driving factors in your decision to purchase a real estate investment. Upgrading a rundown house in an expensive area is going to net a much bigger return than overdoing the renovations on a home in a rundown and undesirable area.

However, how do you find a great location? Look for areas that are considered “hot,” by either comparing prices in your neighborhood or even reading real estate listings. You’ll see houses listed with write-ups that say things like “Great house in trendy PARKDALE,” or “Sweet find in desirable CABBAGETOWN.” If a real estate agent has decided to highlight a location, that means it’s a selling point.

Also, did you know that the smallest or cheapest house in a new housing development is the one that will typically appreciate the most over the course of five to ten years? If you’re buying a new property as an investment, don’t waste your money on an extra ten feet of yard or a fifth bedroom that’s not going to give you the return you want.

2. See the Potential

When searching for great properties in foreclosure investing, remember that you’re looking for the buying public, not yourself. You want to find a home that’s appealing to the masses and has great potential.

With a foreclosure investment, you likely don’t want to get into huge, expensive renovations, so look for a property that can be cleaned up quickly and cheaply. That run-down looking house could be power-washed and painted to appear close to new again while a threadbare front lawn could be re-sod and dotted with potted plants to add curb appeal.

In other words, don’t overlook a property simply because it doesn’t grab your eye personally. Instead, look at every listing in your location and think “what would this property look like if I invested just $1000 into fixing it up?”

There’s no magic formula to developing “an eye” for real estate and foreclosure investing. It takes knowledge of the market, a focus on location and the simple willingness to see the potential of a hidden gem.