The decision to rent or buy foreclosure properties comes with many considerations.
Foreclosed homes come in all price ranges and are often priced well below market value.
The decision to rent or buy foreclosure properties comes with many considerations. Foreclosed homes come in all price ranges and are often priced well below market value.
When you're evaluating if you should rent or buy foreclosed homes, you should first consider how long you want to stay in the property. If you simply want to move into an area for a short time to be close to a work opportunity or to care for a sick family member, you can often rent for less than a mortgage payment would be. However, if you want to live in the home for five years or more, you may get a great deal and therefore a low mortgage payment on a foreclosed home.
The biggest factor to consider when deciding whether to rent or buy foreclosed properties is that these distressed homes are sold as-is. You will need to be careful and perform due diligence on foreclosed properties that you want to buy. A home inspection tells you the condition of the home and if it needs major repairs. A title search shows you if any liens are on the property that you may inherit when you buy it.
The buy vs. rent debate is also heavily impacted by profit. If you plan to stay in the property long-term, or you want to turn a profit on the investment, buying a foreclosed home is probably the best option. If you want to buy a cheap home, fix it up and resell it, you may need cash for the entire home price and the repairs. This practice, known as house flipping, is an incredibly lucrative opportunity for those with extra cash and the time it takes to remodel a house.
Take time to consider whether the investment you'll need to make in the foreclosed home is worth the potential return. The return is an important factor in deciding whether to rent or buy foreclosure properties if you plan to resell. Some foreclosed properties don't have any damage, though. These may sell closer to market value, but be a better option if you want to live in the home immediately.
The final consideration in deciding whether to rent or buy foreclosure properties is financing. The lending market is more strict about credit history than it once was. If you're having trouble getting a mortgage, consider renting the home first. The seller may offer the option of renting to own, which is often a convenient way around traditional mortgage standards.
The rent or buy foreclosure properties debate depends largely upon individual circumstances and preferences. If you want to explore foreclosed homes to help make your decision, click here to get free real estate listings in the area you want to buy.