Things to watch out for when buying a foreclosed home

To many people want to run and buy foreclosures before they know what they are doing. Buying foreclosures can be a way to make money and it could be a way to lose your life savings, so be careful before buying foreclosed homes. This article will give you some legitimate ways to find foreclosed homes and what to watch out for.

First consider many things here and please understand the differences. Short Sales are usually homes in foreclosure, but not foreclosed homes. You can buy a short sale, but at slightly less than market price. There is no way for an investor to make money buying short sales, as they must appraise. The banks will not sell the home for less than what they could get elsewhere. They will choose to let the home foreclose and place it back on the market theirself.

A foreclosed home is one where the owner has already lost the home and it is being auctioned on the court steps or available through many sources. A foreclosed home may still have the owner inside the home and you may have to evict the owner. A foreclosed home is not open for inspection, so the most you get to see if by a drive-by. Now, if you are buying a bank foreclosed home, they have already evicted the tenant and have raised the price to accommodate cost involved in the transaction.

The best buy is on the steps of the courthouse, but you must take the responsibility for the repairs, evicting the tenants and even paying off the 2nd and 3rd mortgage. So it is necessary to hire an attorney to protect yourself. When purchasing a foreclosure on the steps of the courthouse, you need to have a fairly large down payment ready to give them on the spot and your financing already set up.
The funds must be in the form of a cashier's check. If the second is owed money, they will be on the steps also and you must agree to pay them, so purchasing a foreclosure is not all that easy. You need to have searched the title prior to the sale to look for all liens to protect yourself.

Where can you purchase foreclosures:

1. Contact a reputable Broker. Especially in todays market, there are tons of Brokers or Realtors working foreclosed properties. They will have a list of all available foreclosures and can help you protect your savings and yourself.

2. HUD homes for sale. You must go through a Broker to buy a HUD home, but you can search the listings yourself. You cannot bid yourself. You must be represented. HUD homes generally go on the high end, but have low down payments and quick financing.

http://www.hud.gov/homes/homesforsale.cfm

3. You can contact any Bank and ask to speak to the REO department. This is also called the loss mitigation department in some banks. Ask for a list of properties for sale and they will help you. They may want the loan with their bank, but that is no problem if you are qualified.

4. You can contact the US Marshall's Office. These homes were taken because of drugs, firearms or alcohol and they have a list available for sale. 

http://www.usdoj.gov/marshals/assets/nsl.htm

5. You can contact the VA. They have many homes for sale and some homes for as little as $1 down if you qualify.

http://www.homesales.gov/homesales/mainAction.do

6. The IRS has foreclosures also. These homes have been repossessed due to tax liens. You can get a list of properties from them also.

http://www.treas.gov/auctions/irs/cat_Real7.htm

As you can see, there are many safe places to buy foreclosures. If you are a learned investor and know how to do the foreclosed property route on the court steps, then those are your best buys, but if not, try some of these links to protect yourself.

How to get a tenant to leave

Tenant eviction problems are just that. A problem that nobody wants to face, but if you own investment property, at one time or another this will come up. This can be an easy process with a few simple steps or it can be a very long drawn out process. Either way it must be done.

From day number one when the tenant moves in be nice and very friendly with them. Do not be aggressive and dictator-like. Offer to help them with whatever you can. Be their friend and their neighbor. The old saying goes, that a pound of honey buys more than a jar of lemons. When it comes to evicting tenants, you do not want to run into a long drawn out legal battle.

Why are you evicting the tenant:

First rule of thumb must be for you to document, why the tenant must go. If you have sold the house and merely want the room vacated, it is different from the tenant not paying the rent. Many foreclosure sales have a huge problem with evicting tenants. The tenant realizes the owner is not making payments, so sometimes the tenant refuses to pay also.

The new owner buys the property and the tenant refuses to move. What can be done? Does the new owner go to the legal process or does he simply pay the tenant to move. In many foreclosure cases, the owner will pay the tenant some "pocket money" to vacate the property quietly and without damaging the property.

If a tenant is forcibly evicted, he will leave the property in bad shape many times. If the tenant is being evicted for lack of payment and breaking his lease, then your options are easier.

1. Give the tenant notice in writing to leave the property in thirty days.

2. If he refuses to leave you can get a company or attorney to send him to court and face a judge.
Most companies for a percent of the rent will evict the tenant in 60 days.

3. At the court hearing you must show proof of lack of payment. This is accomplished by showing the lease and bringing records of payments.

4. Record any damage the tenant has done to the property, so you can be compensated for that figure.
Most tenants when served with an eviction notice by a policeman will evict the property right away, but if they do not then it is pretty simple in most states. It is easier to evict tenants who are on a month to month lease. Any tenant with a long term lease, can have a better chance in court to win.
Expect the worse of people. The tenant will cry, scream and yell at the court about everything you ever did wrong and at times even say they do not understand English. Make sure you document everything before going to court. If you have any witnesses to what problems have occurred at the property, then those would be good also.

In the end, the property will be vacated and you will be leery the next time you rent to someone. As a measure of warning on rentals.

1. Always take a credit report on new tenant applications.

2. Always take a full application on all parties occupying the property.

3. Hire a Real Estate company to rent the property and give them a percentage of the first month's rent.

4. Require to see proof of income.

5. Recommendations of previous place of residence.

6. Personal references of friends and neighbors. Look to see the employment of the references.

In the end you have come away from this experience with more knowledge, a better plan for next time and a clean apartment now for renting to the next tenant.