Finding a distressed property with rehab potential is no easy task, especially these days. Low inventory coupled with soaring interest rates have kept many people out of the housing market altogether — including investors.
That’s why it pays to get creative when searching for your next real estate investment project. Although the Multiple Listing Service (MLS) is a great place to start, you’re missing out on off-market opportunities.
Have you considered a foreclosed property?
Foreclosure levels in the United States have been on the rise in recent months, and we expect this trend to continue in the fall of 2023. Some cities and states have been harder hit than others.
According to data from ATTOM Data Solutions, there were 33,952 foreclosure filings in the United States in August 2023, a nearly 2% increase from the previous year. The foreclosure rate in August was one in every 4,380 housing units.
The states with the highest foreclosure rates in August were:
- Nevada: One in every 2,224 housing units.
- Illinois: One in every 2,433 housing units.
- South Carolina: One in every 2,500 housing units.
- Maryland: One in every 2,796 housing units.
- New Jersey: One in every 2,840 housing units.
The cities with the highest foreclosure rates in August were:
- Atlantic City, New Jersey: One in every 847 housing units.
- Florence, South Carolina: One in every 879 housing units.
- New Haven, Connecticut: One in every 975 housing units.
- Baltimore, Maryland: One in every 1,037 housing units.
- Mobile, Alabama: One in every 1,078 housing units.
But how to actually find a foreclosure?
- Use online foreclosure listings. There are a number of websites that list foreclosures, such as Zillow, Realtor.com, and RealtyTrac. But one of the most comprehensive sources is Foreclosures.com. For a monthly subscription, they provide information about the listing itself, usually with pictures, plus contact information for the trustee and/or attorney involved with the property.
- Contact your local county clerk's office. The county clerk's office will have a list of all foreclosures in your county. You can usually search this list online or in person.
- Network with real estate agents. Real estate agents often have access to foreclosures before they are listed on the market. Let your real estate agent know that you are interested in foreclosures, and they may be able to notify you when new listings become available.
- Attend foreclosure auctions. Foreclosure auctions are held on a regular basis by county sheriff's departments. At a foreclosure auction, you can bid on homes that have been foreclosed on by the lender.
Found a foreclosed property with meat on the bone? What next?
Be sure to inspect the property carefully and get an estimate of the repairs that are needed. You can use our downloadable Scope Of Work template to organize this process. You should also look at some comps to assess the property’s rehabbed value. A good real estate agent can help with that.
Foreclosure investing can be a great way to find good deals on real estate, but it is important to be prepared. Be sure to do your research and understand the risks involved before you make an offer on a foreclosure property.
Here are a few additional tips for real estate investors who are looking for foreclosures:
- Focus on specific neighborhoods. If you know of a neighborhood that has been hit hard by foreclosures, target that area for your search.
- Be prepared to act quickly. Foreclosure properties often sell fast so it pays to be nimble.
- Have your finances in order. Before you start looking for foreclosures, make sure that you have your financing in place. We can provide you with a free, customizable Proof of Funds letter once you create a member account with NavCap.
Need help lining up financing on your foreclosure or just want to get pricing on your latest project? Reach out to your loan officer directly or contact email@example.com or 888.444.3160 to be put in touch.