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Flipping Houses: 4 Signs that a Foreclosure is a Good Investment


The key to successfully rehabbing properties is to have a keen eye for profitable foreclosures. You don’t need years of experience in the business to separate the cream of the foreclosure crop from the rest of the houses on the market, either. You just need to know what to look for. Here are four things that all profitable foreclosures have in common:

  1. A solid foundation. A well-kept structure with healthy support beams makes all the difference when rehabbing properties. While you should expect all affordable foreclosures to be in a certain state of disrepair due to long periods of non-residence, if a house has sturdy, non-bowed support beams, you can be sure that it’s strong enough to withstand extensive remodeling and safe enough to inhabit for years to come.
  2. A good location. Location is everything when it comes to real estate investing, and that’s why foreclosures in urban areas require close scrutiny. They tend to be located in less-desirable neighborhoods. As a rule, foreclosures in rural areas tend to be safer investments, because no matter how far out in the country a house is, there’s always a buyer looking for a private getaway if the deal is good enough.
  3. No liens. If you’re thinking of buying a particular foreclosure, it’s important to see if the house has any liens on it before you even think about committing. If the previous owner neglected to pay property taxes and insurance premiums in addition to their mortgage, those fees will transfer to you. You don’t want to be stuck paying thousands in back taxes on a real estate investment, and it’s a sure bet that none of your potential buyers will either.
  4. A major selling point. Whether it’s a fireplace, a still-intact oak floor or a finished basement, every profitable foreclosure has at least one major marketing point that will attract buyers. If a foreclosure doesn’t have potential in the first place, you’re going to end up spending more than you should to create some.

Investing in foreclosures is a great idea when rehabbing properties – as long as you know what to look for. If you keep these tips in mind when you’re shopping around for your next project, you’ll be setting yourself up for success.

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