An interesting trend has emerged in recent years and in areas that have been hit hard by poor economies resulting in real estate foreclosures. Investors willing to invest in real estate foreclosures have moved on and purchased properties that have been foreclosed on by banks and lenders for unpaid mortgages. They do this to buy the property for much less than market value to turn around and rent it out. This is a great opportunity for everyone in the area, not just real estate investors. What do we mean by this?

On the one hand, people whose homes have been foreclosed on still need a place to live. Quite often they may have lost their jobs or had to take a job that just doesn’t pay as much, for example working behind a counter instead of in an office. With investors coming into the area and buying homes that have been foreclosed on and can be rented, then there are more rental properties available for those who simply can’t afford a mortgage. Make no mistake, many lenders say you can pay a mortgage for the same amount you pay your rent, but that’s not always the case. Rental properties are often more affordable, and real estate investors are providing some much-needed housing when nearby apartment complexes fill up. Also keep in mind that when apartment complexes have few vacancies, they are less likely to offer discounts and deals on their rental prices, so by offering more homes for rent, investors in the real estate market are actually keeping rental amounts down. competitive rent in the area.

Also, when a bank repossesses a house due to an unpaid mortgage, they actually keep that property. Banks don’t have staff on hand who can maintain the lawn or keep vandals away. When there are a lot of foreclosures in an area, there are fewer buyers for any given property, which means the bank needs to somehow hold the property, manage it being on the market, etc. This is a lot of extra expense for them. Foreclosures offer a valuable service to banks by buying the property, fixing it up, and then handling all the rental paperwork, etc. Without them, the banks would have a treasure trove of unsold properties that they would have to manage somehow.

Because these homes are often much more affordable than most, anyone looking to get started in the rental industry would do well to research foreclosures as an opportunity. You can start with a particular property and handle the purchase, repairs, lease, etc., without having to buy an entire apartment complex or hire a maintenance company to do all of this for you. Investing in the real estate foreclosure market will bring with it some challenges, just like renting any property, but considering the small investment it may take to reap a big payoff, it’s definitely worth looking into.