Why You Need An Exit Strategy As A Foreclosure Investor

Why You Need An Exit Strategy As A Foreclosure Investor
05-19-08


Making good investment decisions is all about planning and research. If you don't want to get burned, you need to know as much as possible about your investment. Investing in foreclosed homes means you need to know exactly how you plan on making a profit, how you will finance the purchase, and you need to know market trends associated with the property. A surprising number of investors don't take the time to consider an exit strategy for their investment. An exit strategy is like your plan B if the market sours. For foreclosure investors, the most common exit strategy is property rental.

Renting a property can in many cases be a superior investment to simply flipping the property. Rental properties can ultimately add up to long term wealth accumulation. With rentals, a foreclosure investor will renovate the property as necessary and then rent the property in order to capitalize upon the property's appreciation. If you've done your homework, you can actually earn a positive monthly cash flow off of each rental property. As a foreclosure investor, your first priority is to purchase foreclosed properties substantially discounted relative to market value.

If you have trouble finding these kinds of properties consider partnering with an experienced real estate agent. An experienced real estate agent can help you search through the MLS and can also tell you all about market trends. If you've spent even just a little bit of time investing in and looking for foreclosures, you've surely noticed that most foreclosed homes are in really bad shape. This means that most foreclosed homes are in need of repair. To make repairs to the home you will need to find an experienced contractor in the area who can provide you with reliable estimates.

Before you start spending money on repairs and improvements for your investment property, you should speak with a realtor first. A seasoned realtor can tell you what kind of amenities and improvements are valued in a home. After improvements are made to the property it's usually a good idea to evaluate the overall rental market. Ideally, you want to purchase foreclosures in areas that have high numbers of rental units. The more rental units present in the area the easier the property will be to rent out.

You can actually get a pretty good idea about the rental market just by looking at the median home price in the area. If the median home price is about half of what average should be, then there's a good chance that the property can be rented out very easily in the event it doesn't sell. If you're going to be investing in foreclosed properties you absolutely need to partner with an experienced realtor. A realtor can provide you with information that you can't find anywhere else.

Mark E. Moebius
Miljonair Homes
Custom home builder St. Louis
3451 St. Albans Rd.
St. Albans, MO 63073
636.300.9000