Property foreclosure is a terrible experience for anyone involved, but it is a necessary evil in the real estate investing market. I do not think there are many people out there that feel that relish getting involved in any type of transaction that deals with a foreclosure but on the real estate investment end of things foreclosure does offer some opportunities as well as some positive aspects to the community.
Now I am not saying that people that have been foreclosed on are trash and that they don’t deserve to own houses and I am not saying that real estate investors should go around preying on potential foreclosures. However foreclosures do tend to be a blight in the communities and can lead to pockets of neighborhood degradation.
Here are some benefits that real estate investors bring to the table in a foreclosure situation:
- Properties that have been foreclosed are often left in disrepair. They may have been vacated quickly and the departing owner often takes out some frustration on the property. After that they often sit in limbo for many months without an effective owner. During this time period the property can degrade quickly and become a local problem. An overgrown house can be a magnet for vandalization or other crime. In the short, it does not help local real estate values. Investors can often take possession of the property before it becomes any type of a problem. Or they can whip it into shape quickly and get it occupied. Increasing the local pride of ownership.
- House sitting in limbo are not available to potential renters. This causes the level of demand for rental properties to go up. This is good for owners, but bad for renters. In the scheme of things a healthy rental market will be a win win situation for the renter and the owner. If there are more rental units available the owners will have more of an incentive to keep the properties in good shape and attractive to potential renters.
- Real estate investors buying foreclosures are often the starting point for the real estate whole sale market. This is the beginning of the real estate assembly line so to speak. If there is no property available on the whole sale market there is a reduced number of homes available to buyers in the retail market or even the secondary investor market. Investors often take property off of the market that many people don’t want or can’t handle. Investor expertise can be attributed in large part to renewal of many urban areas or the development of new areas.
Foreclosure happens in good markets and bad markets and real estate investors should always be on the lookout for potential deals and area where they can really make an impact.