Buy Foreclosures for Income Property
A lot of people talk about purchasing REO property as a chance to purchase undervalued property to turn around and sell it at a higher price. However, there is an alternative property investment strategy that often goes unnoticed. It’s the rental market.
So what do bank owned properties have to do with rental properties? A lot, actually, according to one San Jose property management company. Let’s focus in on two important points here: Rental price and purchase price.
Foreclosures have an effect on purchase prices
First, and this is important, nearby foreclosures have an effect on the purchase price of a home, which affects the investment value of the home. If you can’t acquire a home at below market value, you will likely have a hard time establishing a positive cash flow on the property.
Foreclosures impact rental prices
Second, foreclosures have a dramatic effect on the rental market by kicking former homeowners out into marketplace to create demand for rental properties. When there is a higher number of potential renters is in competition for the same number of available properties to rent, monthly rents are going to go up or at least remain stable. This can provide a stable, positive cash flow for the investment.
Because of these foreclosure ROI factors, smart rental property investors are coming out of the woodwork to take part in the foreclosure as rental market. In fact, few rental markets in the country are suffering, and that’s precisely because more former homeowners than ever before are being forced to rent.
One Colorado Springs property management firm suggest that vacancy rates have decreased significantly in 2010 over the previous year. This is great news for investors interested in snapping up Colorado Springs rentals as the real estate market seeks to correct itself from the peak experienced in 2006.
This entry was posted on Thursday, April 29th, 2010 at 4:18 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.