Foreclosures and Seven Days of Bidding... Ago

One of our members is looking to buy a foreclosure.  Housing prices in his neighborhood have not recovered from the bottom, so it looks like a steal.  Foreclosures often have no appliances.  Sometimes they have been trashed by previous tenants.  If someone could not afford their mortgage, they probably couldn't keep up with home maintenance (roof, utilities, etc.)  Houses like these require a bit of work.  Inspections of the house may not be possible. 

Cash offers may be the only things accepted.  So, if you'd like to throw around tens of thousands of dollars, or more, then this might be for you!

The house that is being looked at is being sold through hubzu.  This site sells houses on seven day auctions.  The company was formerly known as GoHoming and they partnered up with Ocwen, a (shady) loan servicing company.  They don't have the best reputation and little to no customer service.  You will basically be on your own if you use this service.  Most people buy through this service sight unseen. If you would like to see a property, you need to enlist a Realtor if you want to go inside the property.  These houses have key pads and folks with their licenses will be the only people to get the code.

The member sat down and went through some calculations.  At best, he's looking to make 8-11% before increases in housing values.  There has been no real increase in property values, so there isn't much room to go down.  There are some tax incentives that come into play.  The size of the house is also an upgrade.  For a future meeting, we may go through these calculations.

For next week, back to buys.

Profit!