lucrative venture
The Advantages of REO Investing
July 6, 2010 by Financemyhome · Leave a Comment
The country’s current economic conditions have consumed the real estate market with foreclosed homes. As thousands of properties are being reclaimed due to non- payment of loans, bank owned foreclosures have gained a strong reputation and popularity amongst real estate investors. Here are some reasons why purchasing an REO is a wise option if you are thinking of investing in a property.
Reduced value, no tax liabilities
The value of a REO is much reduced compared to their real worth which makes it a lucrative venture for home buyers. The banks become liable to pay taxes on the properties so they very anxious to get rid of these as soon as possible. The banks will offer better deals than they would offer on traditional properties and most often the properties will be available below the market price. The bank will also provide discounts for certain repairs.
Once a property becomes an REO, all liens against the property are removed and taxes are brought to current. This makes REO investing a secure venture compared with other real estate deals.
Saleable properties subject to inspection
Many foreclosures are often in deplorable condition. However, REOs are usually restored to at least a readily salable condition by the bank and evict the tenants, making it attractive to buyers. REOs can also be inspected prior to contract unlike properties at foreclosure auction. You can inspect the property before giving an offer to the bank. You are granted full access to the property and all utilities will be made available for you and your inspector. Most importantly, your deposit is returned and the contact voided if f you’re not comfortable with the condition of the house and do not want to proceed.
Easy low interest financing
One of the best features of REO investing is that buyers can get low interest financing from the same bank which makes the deal highly feasible. Sometimes, property lenders may even be willing to finance the property at less than market value. You may also get loan if you have a good credit record then. Most of the banks require only 10% down payment if the property is to be used as rental.
Fast transaction, more opportunities
Another great aspect of flipping REO properties is that the time spent for your deals is cut in half. There is no need to wait for a bidding to start. The deal moves pretty fast once you’ve agreed on the price. Negations are normally quick as banks have no emotions involved. This means less time on each property and more deals for you to get into.
Did you like this article? Crystal is a single mother who works at home. She shares her experience in the challenges of single motherhood and writes tips to working at home in the Philippines on her blog. She is also an SEO and freelance writer who creates unique articles for various websites.
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