According to the recent Real Estate Investing Report, 85 percent of Millennials believe that investing in real estate would be a great financial decision. Over half of respondents are even interested in investing their own money in the near future. But with so many types of properties on the market, which should you choose to invest in? For many, the answer may be foreclosed properties. Here are the benefits of investing in foreclosed real estate.

1. It improves the neighborhood’s quality of life: After a property is foreclosed, the home typically begins to deteriorate over time. In some cases, it may even house families of animals and/or criminal activity, which is not ideal for the neighbors. Once the home is purchased by an investor, however, the property is usually upgraded and renovated. It not only improves the stability of the neighborhood, but also the residents’ quality of life.
2. It helps boost the local economy: As mentioned in our previous blog post, “What are the Components of a Mortgage Payment?” property taxes are typically collected by the lender as part of the borrower’s mortgage payments and held in escrow until it is time to pay the government. This money is applied towards real estate taxes, which cover local public services like park construction and school renovations. So if a homeowner lapses on their mortgage payments, less money can be used to fund projects throughout the community. By investing in foreclosed real estate, you therefore have the opportunity to help boost the local economy.
3. Property information is easily accessible: Although foreclosure properties have been notoriously difficult to retrieve information about in the past, the home shopping process is now easily accessible online. Many sites are even dedicated solely to foreclosed real estate, like Auction.com. Through sites like Auction.com, investors have the ability to not only learn about and bid for a property without leaving the comfort of their homes, but also have the opportunity to jump start renovation planning to upgrade the property.
4. It allows you to build equity fast: By purchasing and renovating a foreclosed property, the investor has the opportunity to build equity quickly and affordably. In fact, lenders offer purchase and renovation loans just for this type of project! Each loan type will help you finance the repairs you need depending on what type of repairs you need to make. An FHA 203K, for example, will cover the projects you need with the exception of luxury repairs, while a Fannie Mae HomeStyle loan will assist you with large projects, including luxury repairs. Learn more about these loan options here.

Overall, if you are interested in real estate investing, it’s a great time to begin discussing your options with a local lender - particularly if you’re interested in a foreclosed property. To learn more about investing in foreclosed real estate, or to learn more about renovation loans, contact one of our mortgage specialists and check out our eBook today.