Best Ways to Profit from a Calabasas Foreclosure

by Calabasas365 staff:

For minor investors, the current market conditions should prove ripe for snapping up Calabasas foreclosures. With the instability of the stock market and interest rates sitting at all-time lows, the real estate market is looking like the safest place to invest. Why not take the opportunity and grab a bargain by finding a Calabasas foreclosure?

In times of economic strife, it’s not unheard of to find Calabasas foreclosure properties for a margin of the market value, located in higher-economic, upscale areas rather than the typical crime-laden boroughs.

However, the dream of buying a bargain home for 30% below market value is fleeting, as some Calabasas foreclosures can be barely 5% below market. However, this is not to say that this year is not a prime time to invest in Calabasas foreclosure properties for high returns in the future.

Before buying a Calabasas foreclosure property to use as a home, rental investment, or a fixer-upper for resale, a clear plan is required. Follow these three steps to invest:

1) Finding The Right Calabasas Foreclosures

The first step in purchasing any property, foreclosure or not, is to assess your needs and wants in a home. There’s no point finding a bargain one-bedroom apartment if you want to move your family of six into your investment.

Determine whether you want to live in the property or rent it out. If you’re living there, what are you and your family’s basic requirements in terms of space and location?

If you intend to purchase a Calabasas foreclosure as a rental property, research the current rental market in the areas you intend to look. Are they family-oriented areas where you would be wise to look for large properties? Or is the neighborhood near a college or university where investing in a two-bedroom Calabasas foreclosure apartment would be wiser, as the space would appeal to students?

Next, decide what part of the foreclosure process you would like to step into:

Only the most expert of investors should dabble in pre-foreclosed properties. However, this is the area where the biggest bargains can be found, but it is much riskier than the straightforward purchases of Calabasas foreclosures.

“Pre-foreclosure” refers to properties whose owners are in arrears for their mortgage payments and are about to default, but the lender has yet to make the property a foreclosure. If a brave buyer can get through the credit lender to the homeowner, they can offer a portion of the difference between the equity and the assessed market value of the property.

Some homeowners will accept these offers rather than lose the equity by the property becoming a foreclosure, but many will have a wagon of financial problems and may require a place to live before they sell. If it pays off, the purchase of a pre-foreclosure home can be a huge saving, but if it doesn’t go according to plan, it can be a taxing experience on your time, money and energy that could have been better spent in searching for a regular property.

For the first-time investor looking into Calabasas foreclosures, it is best to focus on homes that are already foreclosed. Finding the right property for your investment strategy is as simple as knowing where to look:

As well as magazines and newsletters that list Calabasas foreclosures, public records are a valuable place to search when on the hunt. When a property becomes a Calabasas foreclosure, a lis pendens (“lawsuit pending”) is filed in the public record. Look for lis pendens, then search for liens on any Calabasas foreclosure properties you find that suit your requirements. Liens are usually present due to unpaid taxes on the Calabasas foreclosure property and will need to be taken into account when deciding whether to invest.

Other ways to find Calabasas foreclosures include calling lenders who may have lists of recent Calabasas foreclosures. You can even find Calabasas foreclosures listed on eBay! There are government run agencies who publish lists of foreclosures, including the Department of Housing and Urban Development. They also run auctions on foreclosed homes that were initially purchased with federally backed loans, but the savings there are minimal due to the frenzied atmosphere at the auctions that push prices higher.

Hidden foreclosures are another type of Calabasas foreclosure property you may want to look out for. “Hidden foreclosures” refers to brand new homes that have not been previous owned. Harsh economic times can leave building companies with sets of brand new, upscale houses with nobody to buy them, and hefty building loans. When they are unable to pay their building loans, the bank will foreclose, take possession of the properties and sell them through real-estate agents. However, nobody in the sale process will mention that the properties are foreclosed, thus the term “hidden foreclosures”. The best way to discover these “hidden” gems is through word-of-mouth. Another option is to keep an eye out for abnormally cheap, new properties.

2) Assess the Calabasas Foreclosure Property like Any Other

A foreclosure property is, at its most basic level, a home that the owner was no long able to pay for. Most property owners who fall into financially hardship fight for eight to twelve months to retain their property before giving into it becoming a Calabasas foreclosure. You can bet that during that last year, the property has received very little upkeep. There will be repairs and general maintenance required before you rent it out or sell it on. On the other hand, the disrepair could give you a chance to make a lower offer.

Always look at a Calabasas foreclosure as you would any other property – what is the true cost of the foreclosure property in Calabasas or anywhere? Will you need to borrow more to bring the property up to standard? Is the location worth the repairs? Are the savings in initial price worth it, or would a well-kept, regular investment property cost you less in the long-run?

When you find a Calabasas foreclosure property that suits your requirements, check the assessed values of properties in the same street and similar types of properties in the local area. See what prices others have sold for. This should give you a ball-park figure of what to expect to pay.

Before you go any further, read up on the California laws pertaining the purchase of Calabasas foreclosures. Unlike other states such as Florida, New York and Ohio, California does not require the lender to sue the borrower to get a court-order for the property to be put on the market. Instead, California follows a non-judicial foreclosure process where no law suit is required. Do your research so you can be sure to cross your t’s and dot your i’s going into the buying process.

3) Get the Funds, Negotiate and Buy

The biggest step in purchasing a Calabasas foreclosure property is to get the funding required.

When you begin your search for a Calabasas foreclosure property, you should get a copy of your credit report and double check that there are no errors. If there are any present, contact the credit bureau immediately and have them corrected. If you have a good credit history and a credit score of 750 or higher, a bank should have no problem lending to you.

If you are proposing to buy a foreclosure property to rent out, this can be seen as an investment and most banks will require just a 10% deposit. Additionally, rental properties are a wise investment choice as you could catch hefty tax reductions as the Calabasas foreclosure property’s value increases and equity builds.

If you are buying a home from a lender and the property has a
defaulted mortgage attached to it, you may have some bargaining power when it comes to closing costs or the down payment required. In extreme cases, you may even be able to haggle over the interest rate.

You may need to contact an agent who specialises in Calabasas foreclosures as some sellers won’t deal with buys who are unrepresented. Shop around and compare fees to experience. Ask for a list of sale prices they negotiated and compare the figures those in the public record as the assessed value for the properties. If you’re unfamiliar with the whole process, a guide to real estate investing would help, or even check out classes at Pierce College.

Closing a deal for Calabasas foreclosures can be a speedy process which lends itself to the buyer’s negotiating power. Sellers want to quickly re-establish a neighborhood. Make your initial offer a little lower than you would for a regular property sale – you may be pleasantly surprised when your low offer being readily accepted and you have successfully nabbed yourself a bargain!