Buying a foreclosure can present a great opportunity when you are looking for a property to fix up and then rent out. There are a few things to keep in mind in order to find the right property and ensure that you stay within budget, allowing the opportunity for the greatest profit potential.
In shopping for a foreclosure property to convert into a rental, it should be kept in mind that there are actually several ways in which you can find a foreclosure to purchase. Among the first ways that you might consider is through the Multiple Listing Service or MLS. The MLS is compiled by local real estate agents and contains all of the currently listed properties for sale. Local MLS listings can be found on a variety of websites, including Realtor.com, Trulia.com, and Zillow.com. Another option is directly through bank REO departments. Bank REO departments are responsible for handling properties when the bank must foreclose on those properties. One of the benefits about working directly with a bank REO department is that you may be able to gain access to a property before it is even placed on the MLS. This could present the ideal opportunity to snatch up a deal.
As part of the process of identifying foreclosure properties to turn into a rental property, it is important to consider a variety of factors. Many times, investors may be attracted to a low price, but a low price can be deceptive. It is also important to consider the condition of the property and the cost of necessary repairs for the property to become marketable. Additionally, you will need to consider the neighborhood. Remember to study the neighborhood at all hours to determine whether this is an area where prospective tenants will want to rent. Find out what amenities and services are available in the nearby area. Is public transportation available nearby?
Once you have identified a property to purchase, you will need to make a plan for renovating it and getting it ready to rent out. Among the most important things to keep in mind when renovating a foreclosure to rent out is that while you should make the home look nice, you should not go overboard with high-end additions. This is often one of the most common mistakes that investors make. Ultimately, it is a mistake that can affect your bottom line. Conducting a tenant screening can help to mitigate damage caused by a tenant, but you never want to have to replace expensive fixtures or finishes due to a destructive tenant.
When you are ready to rent out your investment property, it is important to make certain you take the time to properly screen your tenants. Conducting a background check is an excellent way to ensure that an applicant will be a good tenant and ensure they are not hiding anything. Interested in learning how you can obtain a free tenant screening? Contact VerticalRent to learn more.