Investment Advice : Five Mistakes Made By Real Estate Investors in Detroit
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By: Shah Karim
Date Submitted: 2010-03-04 01:34:06 - Article Views: 40
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Property investors in recent months have greatly benefited from foreclosures in the Detroit area. However, although experienced investors can navigate the pitfalls of buying foreclosure property, the inexperienced first-time investor is exposed to a number of risks. These buyers need to educate themselves beforehand in order to avoid these five common mistakes.Mistake #1 - Purchase Price: Whilst the price for foreclosure property is likely to be significantly less than its value just a few years back, many such properties often require substantial repairs. Houses that are only a few years old, it can deteriorate quickly. Therefore, you must allocate a realistic budget for these repairs or upgrades and always keep a contingency fund in place, for any unexpected works. Remember, it's vitally important to keep these repair costs in mind when negotiating, so you do not end up over-paying for a foreclosed property. In addition, you will need to ensure that you have funds for the closing costs and advance taxes (especially for properties in the City of Detroit).Mistake #2 - Bad Location: Inexperienced buyers sometime may overlook the location of the property in favour of a discounted price. This is a false economy as you must consider the location as paramount importance when investing in property for the long term. It's never a good idea to buy the best house in a bad neighbourhood, as not only will the property and the value detoriate with the neighbourhood you may have difficulty in renting the property or selling in the future. The golden rule is buy the worst homes in the best neighbourhoods, to ensure yourself of the highest rentability and resale values in the future.Mistake #3 - Home Inspection Report: Most foreclosure properties are often advertised "as is" with a tight timescale. As a result some buyers waive a home inspection. A prudent buyer is never advised to do. Because such homes are neglected by owners who stopped caring about their home once they stopped making their mortgage payments.Home inspections on these types of properties can reveal leaky or damaged roofs, rotting foundations, malfunctioning plumbing, electrical, mechanical or heating systems, mould and radon contamination and termite infestation. Without having an experienced home inspector examine these components thoroughly, a buyer could inherit a much larger and costlier repair invoice than expected.Mistake #4 Cloudy Title: When you have location a suitable foreclosure property you should conduct title search to determine if there are any lien on the property. In the United States in addition to the mortgage there may be lien registered for unpaid taxes or water bills. In order to obtain clear title you must ensure that all unpaid liens are paid prior to taking title to the property.Mistake #5 Cloudy Title: When you have location a suitable foreclosure property you should conduct title search to determine if there are any lien on the property. In the United States in addition to the mortgage there may be lien registered for unpaid taxes or water bills. In order to obtain clear title you must ensure that all unpaid liens are paid prior to taking title to the property.As a new investor to foreclosure properties you must ensure you calculate the amount you may require in addition to the purchase price. Secondly, ensure that you research the neighbourhood and ensure if you are buying a property in good neighbourhood. Thirdly, ensure you conduct a home inspection to assess the structural and internal condition of the property. Make sure your property is likely to increase in value in the longer term. Again, this will be helped by selecting a property in a good neighbourhood. Finally, conduct a title search to determine if there are any unpaid liens and ensure you obtain a clear title. |
Author Resource Required for Reprint:
We operate an full investment service for investors looking to acquire Detroit properties. For more free resources and information about Detroit and available investment properties visit http://www.detroitinvest.co.uk
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Article Source: ArticleMind.com 
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Tags:
detroit property  foreclosure real estate investment reo investment real estate |
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