Foreclosures

Here are some things to remember if you start doing foreclosures. Most government sites allow you to have a free temporary access. Research the owners name, frequently the owners obtain loans in different names. You can do records searches by name and by property address. Make sure the foreclosure is by the first mortgage company, not a second mortgage. Make sure there are no IRS tax liens on the property. If you buy the property and there is a IRS tax lien, you have to pay the lien – you can’t get out of it. Ditto local gov. citations.

Look into whether the foreclosure was brought by an HOA for back dues. If you buy the property, you may inherit a mortgage. Verify for any mechanics liens or construction liens on the property.

Look at the property – many times you can look through the windows and get an idea of the condition. If it is listed with a REALTOR, go see the inside. Look at the neighborhood – many neighborhoods are going down. If there are a lot of cars in the driveways, that is not a good sign. It means the owners are too lazy to have a garage that they can put their cars in and are filled with junk from floor to ceiling. See if garbage cans are visible – either in front of the garage or at the side of the house. The better HOAs do not allow trash cans to be visible except on collection days. What conditions are the lawns and driveways. Is the driveway dirty and oil stained? Nor do the HOAs allow trees and shrubbery to touch the house and send a letter telling the owner to trim them.

It may be a problem if the owner is still living in the property. Getting them out can be difficult and dangerous. Also, if evicted, they often damage the house after you have seen it, including pouring cement in the toilets. If they were a smoker or had a dog, what does the house smell like?

If you buy it to rent it, make the rent high enough it keeps the riff raff out. Require first, last month’s rent and a security deposit equal to the monthly rent. Keep track of rehab expenses, they are tax deductible. If you buy it to resell it, keep track of all your rehab expenses – it’s a tax write off.

Make sure you research the owner and the property well. You do not want any surprises of unexpected expenses. If it has a septic tank or well, make sure the septic tank is pumped out and the well tested for water quality. Do not be hesitate to walk away from a losing proposition and lose your deposit. A deposit is small compared to fixing up a nightmare.