Foreclosure multi-family properties

March 8th, 2007

Foreclosure multi-family properties are rental housing properties usually consisting of five or more units and can be classified as apartments or townhouses. They can also be nursing homes, hospitals, retirement centers, and occasionally, but rarely, vacant property/land.

Although the profits from a foreclosure multi-family property which you acquire can be huge, this is not a good investment choice for a beginner. However, it can be done and done right! Just remember that there is much to know in order to avoid any pitfalls that might occur.

Foreclosure multi-family listings are easily found through various agencies and even on the web. It is typical to get these properties for a good price, but some can be fair market value. Usually these types of foreclosure multi-family properties are sold under a closed bid. In order to make an informed decision regarding the bid you place on the property and/or whether or not it would be a financially sound investment, you should investigate the property as much as is possible for location, neighborhood, repair issues, etc.

These foreclosure multi-family properties are sold on a cash only basis, so it is a wise idea to get your financing in advance of your bid being the winner. If this is the case, you will have a very limited amount of time to pay for the property or you risk losing your deposit as well as the sale. By obtaining your financing upfront, you have an estimate of what you can afford and you will be able to move quickly on a property. It also tells the foreclosure multi-family property owner that you are serious and can buy immediately.

It is also an excellent idea to have an experienced agent at your side every step of the way. They will know the process and can help you through it. Also, they will be able to represent you in every aspect.

When buying a foreclosure multi-family property, with no agent, you are on your own. There is no escrow, no title report, and no title insurance. You get no warranty, no assurance of the property having no liens or loans against it, no inspections, no disclosure from previous owner as to its’ true condition, etc. and you are responsible for evicting tenants if need be.

Foreclosure multi-family properties can provide you with a means to a very profitable end, but do not go into this type of investment blind. Arm yourself with knowledge and a good attorney, just in case.