Buying a Foreclosure in Orlando? What You Need to Know
Buying a Foreclosure in Orlando
When foreclosures in the area rise many people see it as a great addition to your investment strategy but don’t take into the consideration the amount of work and care that is needed. Florida’s Foreclosure market has been a great source for many investors and buying a foreclosure in Orlando might be a lot easier than you think. Making sure you are mentally and financially ready to take on this challenge though is very important to make sure you don’t end up losing out on this deal.
Finding a Good Deal
Real estate investing has grown in huge popularity over the past few years as it is one of the quickest ways to accumulate wealth. Many people are interested but don’t know where to begin or how to tell what is a “good deal”. In real estate typically, you can consider a deal good if you get it for at least 80% of the market value while also taking into account repair and upgrade costs. When buying a foreclosure in Orlando it is best to analyze the market to have a good understanding before putting out any offers.
So, to put that in an example let’s say you find a foreclosure listed at $135,000 and you and your real estate agent deem that it is a fair market value assessment, but only if the house was in top notch condition. The first step was figuring out what is the market value you would get if the home was repaired and in good condition. Now you want to figure out how much it will cost to do those repairs and any upgrades you may want. This is where you talk with your contractor to get estimates on the costs. In this example let’s say your contractor estimates repairs at $20,000. To figure out what you should offer the seller all you have to do is take $135,000 and take 80% of that, equaling to $108,000. Then remove the costs of upgrades and repairs which in this case is $20,000 and that leaves you with $88,000 to offer. Now you can have some breathing room up or down to negotiate but there is no need to put yourself in debt or lose money over a deal.
Buy Before the Auction
The above goes over if the home has already been placed under foreclosure and sold in the auction before being put back on the market. If the home hasn’t been sold and put up for auction another option is buying the home directly from the sellers! The owners have the right to sell the property before the auction and in most cases, they are extremely motivated. This can net you a great deal and can help prevent a foreclosure for them.
The first step is to contact the homeowners and make your offer! Be advised as if the offer is accepted the transaction will move quickly. It is also a good idea to consider buying title insurance as a way to protect yourself from liens and issues down the road.
Know the Law
The Right of Redemption is a law in some states which means the homeowner who has been foreclosed on has the opportunity to buy back their home. This usually is only in a period of time that varies up to a year. Using the home above that you purchased for $88,000 the previous homeowner would be allowed under the right of redemption law to buy back the home for the sale price plus interest. Be aware of the laws in your state to avoid upgrading and fixing someone’s home for free! Check out Florida’s right of redemption laws here.
Real estate is tricky but when done right it can be hugely profitable! Taking the time to learn your market before diving in increases your chance of success. Reach out to us today to learn more professional tips about buying a foreclosure in Orlando!
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