Find Treasures in New Construction Foreclosures
Brad Hess
Find Treasures in New Construction Foreclosures
Most people associate foreclosures with run down dilapidated homes in crime-infested neighborhoods, but this is not true. The truth is, you can find treasures in new construction foreclosures, if you are able to locate them. Also, called “hidden” foreclosures, these properties have great investment potential if you’re lucky enough to come across one.
Due to the sluggish economy, many builders are left with mid to higher priced homes with no market to sell to. Often left with a significant amount of money invested, builders are facing foreclosure because they cannot afford to carry the burden themselves. Keep in mind that these are not previously owned homes -- these are brand new, never lived in properties, and they can be difficult to find. They normally do not appear on the national lists and besides normal advertising with reduced prices, the builders don’t announce that their property is in jeopardy of being foreclosed on.
In cases like this, when builders have reached the end of the construction-load period and have no buyers in sight, the banks who hold the construction loans then take ownership of the property and attempt to sell them using real estate agents.
Locating “Hidden” Foreclosure Properties
Depending on your geographical location, these foreclosures may be plentiful or non-existent. In cities where major home construction once thrived, but now stands with a number of vacant homes, might be a place to start searching. Try contacting the builder to see what the situation is.
If you work for a real estate company, or you have someone that can give you insider info, talk to them to see what the latest gossip is on new properties that are not being sold. Even though the builder may want to keep it hush-hush, it’s obvious if a home is vacant, and that it’s not selling for a reason.
If you happen to locate a bank-owned “hidden” foreclosure, you might be able to get a good deal. Typically the bank only wants to recoup their losses for the construction loan and is not interested in owning the property. If a home is partially finished, you may be able to get a better deal, but know what it will cost to finish the construction.
Securing Funds to Seal the Deal
Finding your first “hidden” foreclosure and closing the deal is not difficult and it may cost less than you think. If you have good credit, a financial institution may loan you the full price of the foreclosure. If you plan to rent the property, you may be able to get a loan with a 10-percent down payment. If you have equity in another home, you may be able to secure a line of credit from the bank to purchase the foreclosure.
Investing in real estate can be quite profitable if you know what you’re doing. If you aren’t familiar with the process of purchasing foreclosures, enlist the help of experienced investors, a real estate coach, or even further your education in real estate. Since there are new strategies appearing every day, you want to stay on top of what your options are so that you can be successful as a real estate investor.