The trend over the past few years has been to look at the real estate market in despair. Prices are down dramatically all across the board, foreclosures are up, and housing inventory is sky high with no signs of coming down any time soon.
For savvy investors who understand the fundamentals of the market, though, the housing market in this economy is anything but gloom and doom.
Right now, investors are purchasing HUD foreclosures almost in bulk and selling them for terrific profit, capitalizing on extremely discounted home prices and a rising demand for these properties. HUD foreclosures are homes repossessed by the federal government because they were secured with Federal Housing Administration loans. These FHA loans went into default and were assigned to the Department of Housing and Urban Development to sell via their unique bidding system.
Because there are so many foreclosures in inventory right now – HUD controls around 51% of those on the market today – the department is weighed down with the burden of thousands of homes on the books. This is why they are available for pennies on the dollar. It is not uncommon for investors to purchase homes worth well over $150,000 for $30,000 – or less.
One real estate investor spent $70,000 on seven HUD foreclosures, plus approximately $30,000 in repairs for the properties. Only three have sold so far, but from those three that sold, he has made a profit of $126,000 – an average of just over $40,000 in profit per property.
This market has incredibly rich potential for investors who have the cash or financing available to purchase these discounted homes and sell them to investors or homebuyers for less than market value – and still turn a profit. As you can see, the housing market is a buyer’s market – and the opportunity to generate significant income through foreclosures is very real.
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Written by Alex Rolim.
