There could be many overhead costs associated with Arizona real estate investing and these costs normally fall into the categories of repairs and advertising or other areas not thought of, but there are some costs that could do damage to your finances for a lifetime.
In the event that the homeowner can’t repair the situation by paying the bank any money that is then owed or agreed upon, the property will likely make its way to public auction where it will be sold to the highest bidder at a sheriff’s or trustee’s sale, called foreclosure.
A good rule of thumb to follow is to only consider buying a foreclosure property if you stand to make at least a 30% profit no matter what happens, and that has to include everything you paid, all of your costs, including loans, etc..
A wise rule of thumb for real estate investing is to be prepared to hold onto your investment for at least four years, whereas the old rule was be prepared to live in a home five years minimum, if you were going to make any money.
The foreclosure process begins when the owner can’t make payments, for one reason or another, and defaults on the mortgage, resulting in the lender pursuing collecting all payments due.
Do you really want a tenant living on your property that has a history of being a credit risk and who habitually doesn’t pay their bills, and maybe didn’t take care of the house either.
It is highly recommended by most investors, that you have a defined strategy for each property before you close escrow, along with a plan for each and every property you buy or you will quickly spin out of control, and in the end you need to know what type of investor you want to be.
In some states, the law sets a certain time frame for foreclosures to become finalized commonly referred to as a redemption period and if you’re considering investing in foreclosures, it is always advisable to find out if and how this law will affect the ownership and possession of any property in your area.
If you make an agreement with a former real estate property owner, then buy the property either from them, or at an auction later, it could be a major mistake getting involved with people who don’t pay their bills.
If you already own a home and still want to invest in other real estate, consider buying a distressed home, or a home in foreclosure that you can either flip or rent to others.