Summarizing some things to consider when buying multi family homes in foreclosure from mortgage companies.
As is the case with many other types of properties, mortgage company multi family foreclosures are on the rise. If you are looking for an investment opportunity, buying multi family homes in foreclosure from a mortgage company could be just the opportunity you are seeking, but there are issues to be aware of.
One of the greatest benefits of purchasing a multi family foreclosure is that you are able to purchase a valuable property at a reduced price, live in the property, and possibly pay all or part of the mortgage with money you receive collecting rent from the property's tenants. After you have paid off the mortgage, you can enjoy complete equity in the property. You can then either sell the property and potentially turn a profit or continue to rent out the other units and maintain a steady income stream.
Although the advantages to purchasing a multi family property in foreclosure can certainly be enormous, it is also important to give careful consideration to the various drawbacks. One of those drawbacks is the potential for additional liens on the property. When a property owner is no longer able to pay the note on a property, it is not uncommon for there also to be arrears on other property expenses, including property taxes. This can result in a lien against the property from the state or local government.
The property may also be subject to other types of liens, including:
- Unpaid income taxes
- Unpaid contractors
- Unpaid loans in which the property was used as collateral
If any such liens exist, you will be responsible for paying off those liens in order to obtain a clear title to the property in question. For this reason, it is important to conduct a title search prior to purchasing any property in foreclosure.
When you are considering the purchase of a multi family property in foreclosure, you should also be aware that you might need to handle the presence of tenants already living in the property. If you plan to live in one of the units, this may mean the need to evict one or more tenants from the property. This is a matter that can sometimes be time-consuming as well as expensive.
Prior to making a purchase agreement, try to find out as much information as possible about the property and the presence of any current tenants.
Finally, take the condition of the property into consideration. In many cases, you may not be able to have a professional inspection of the property performed. This means that you could be facing the need for expensive repair costs that may not be readily visible from the exterior.
Buying multi-family homes in foreclosure from a mortgage company can prove to be an excellent avenue for obtaining an investment property at below market value. Enlisting the advice and assistance of a qualified real estate professional will greatly assist you and QualitySmith can help by putting you in contact with one in your area.