The underground Keys to Financing safe bet Homes in Real Estate Investing
In many areas of the country developers bought tracks of rural land and developed these into new home subdivisions. New homes cropped up over the landscape and were sold with financing from accepted lenders. All in all, these projects were successful if done pre-2007. Projects after this time period were often fueled by rampart investor speculation and many homes were completed but large percentages of these were never occupied, or only busy for a few years as the store fell and these homeowners abandoned their homes.
The underground Keys to Financing safe bet Homes in Real Estate Investing
States like Florida and Arizona had vast areas of abandoned houses dot the skyline in some rural areas that were intended to be self-contained suburbs of major cities often called bedroom communities. There exists an opportunity for real estate investors to buy and sell these homes after a foreclosure has taken place or a short sale is completed.
So, if you are an investor reading this, ask yourself why other investors aren't jumping all over these pristine properties that are moderately decaying because of no buyers. There are essentially two reasons, first, investors can't find buyers who want to live in virtual isolation in these communities. Secondly, the quality to have end-buyers finance these properties is very limited, especially to buyers with challenged credit.
There is an expression in real estate investing that says that if the price is right, someone will buy it. This is true especially if the marketing attempt shows the asset to enough people. Marketing any asset is the key to production profits in real estate investing and this goes beyond the usual formula of using the many Listing Service. The most mighty investors have the largest buyers list and can dispose of their properties in days instead of weeks or months.
The first issue is finding the buyers and many investors overlook international buyers because they are more difficult to find. However, they are generally cash buyers so there is no problem with financing a asset or getting an estimation appropriate to a lender. Financing is the second issue that is often a problem in production these deals happen. accepted lenders, often the same lenders who financed the original project, do not want to loan on a asset where they already lost 80% or more of their original investment. But a few investors have found a secret to getting financing for these properties.
As I mentioned in the beginning, many of these sub-divisions have been built in rural areas. Not just rural in the sense of way out in the country, but also for zoning purposes. This is the key to financing these wayward properties. The Usda (United States agency of Agriculture) has loans ready for properties placed in designated rural areas. Originally designed for farmers, these loans can be used by anything who qualifies and where the financed asset is in a designated rural area. Currently, and this is field to change, the reputation score requirement is a 640 Fico score and they will finance 100% of the purchase price.
In summary, if you are finding to purchase distressed homes where developers have failed, be true that you can resell them by developing a buyers list beforehand and look to lenders who will finance in these areas. Retired individuals are perfect candidates for these projects as they are living in their homes and are not traveling back and forth to work - so there is roughly all the time someone in the community to watch out for vandalism. The infer these properties are so appealing is that they are selling positively at 10% to 20% of the original financed amount and well below the transfer cost of a similar asset placed in a "normal" community. Many investors are finding these communities are a terrifying new source of profitable deals.
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