Best types of REO to purchase
Best types of REO to purchase
You might not think the type of loan the home was purchased
with the first time around matters but it does. You should
attempt to purchase REO’s that had a conventional loan the
first time around, as you will likely get much better deals
with these than you will if you look at FHA and VA loans. The
federal government backs FHA and VA loans, and the government
can actually buy them back if they are so inclined. Homes that
had conventional loans the first time are often purchased for
just a fraction of their value, meaning that they can make an
investor a lot more money.
Which REO’s you should not purchase
Just because the bank owns a property does not make it a good
deal. In fact, when you see that a home or property is an REO
you have to wonder exactly what IS wrong with it. The house was
not bid on because no one saw the worth in it. Did the home just
not have enough equity? Were their IRS liens against it? Was the
property just too badly damaged? You need to ask these
questions. If the bank cannot answer the questions then you
need to be even more skeptical. Take advantage of your right to
inspect the REO so that you can see with your own eyes what may
or may not be wrong, hire professionals if necessary as well.
One must also be sure that if they are purchasing an REO to fix
it up and sell it, that the property is located in a desirable
part of town. If the home is not located in a desirable part of
town, you should really think about how wise of an investment
the property may be. Perhaps location is why the property was
not bid on at auction. There are three big things to consider
when dealing with any type of real estate and those are
location, location, location. Never let a seemingly good deal
let you lose sight of how important location is for any piece
of real estate that you intend to sell.