With a great location, the right market conditions, and savvy decision-making, foreclosed properties can turn you a profit.
Hunting for the right foreclosure is part and parcel of the process. If you look hard enough, you can find some great deals and steals that would cost twice or thrice the amount in normal circumstances.
But in spite of how appealing some properties may look, you should always stick to a code of principles to help you make better decisions. For example, here are some things to avoid when foreclosure hunting:
Abandoning the plan
Before going on the prowl for foreclosures, one must plan what to look for and what budget to work with. Even if it feels as if a certain property is worth going over the budget for, you are ultimately denying yourself of other properties that may be redeemable at a lower cost if you had only looked harder.
A compromise in quality
In foreclosure hunting, as in any aspect of life, one should never come from a place of desperation. The cheapest properties are usually the worst fixer-uppers. The location might not be profitable as well. Consider the cost of repair and its resale value -- otherwise, you might have to spend more on the property than you normally thought you would.
Taking representations at face value
It always pays to be overcautious when dealing with foreclosures. Even if the property should have proper documentation, a prudent investor would go beyond what’s on paper and check for irregularities. Pay a visit to the local Registry of Deeds and check for other encumbrances annotated in the TCT of the mortgaged property. It wouldn’t hurt to also ask the neighbors about the owners and the property in general, just in case there were extraneous matters left out of documentation.