Maybe.  It depends.  Chasing the short sales and foreclosures is all the rage right now, of course (summer ‘08 in Tucson seems like the summer of pain for sellers).  But you absolutely must use caution, research like crazy, and be smart about it!  “Distressed” can mean the seller is no longer making payments, but it can also mean the property is in bad shape, and will require a ton of cash to purchase, and a ton more to whip into shape.

Are you looking to live in it?  Rehab and rent it?  Rehab and sell it again?  These are very very different purposes, and your motivations and gameplan should be carefully considered.  If you’re after a certain neighborhood, and see something so far below the comps that it is a “steal” and you have the money to get it to lovely condition, then by all means, it’s a good chance to buy into your desired neighborhood.  Know that you may not be the only person who feels this way…if it’s Sam Hughes, I’ll be there bidding too! 

 If you’re looking to rehab and hold it, as a rental, know your rehab costs, and learn the rental market. Be conservative….can you afford to carry it through the months of work? Can you afford more downtime if it doesn’t rent right away?  Is your rental expectation realistic? Tough questions, but lots of people are addicts of HGTV and never finish.  Don’t let the short sale or foreclosure frenzy get you in over your head.

 If you’re looking to flip, know this.  Flipping is over.  The buyers’ market is still going to be a buyers’ market, even if you pick up a property for what you feel is a song. You won’t be able to sell high.  You’ll buy low, but sell low.  My advice… flipping is the last reason one should go after a distressed property.  Buy it to live in it?  Yes.  Buy it to use as a rental property?  Maybe.  Buy it to flip?  Probably NOT a good idea. 

According to Yahoo news, 1 million properties are in some stage of foreclosure, so there are “deals” out there.  But know that the competition is stiff, you need a lot of cash (to buy, and also to do the work if it needs it), but the market is slow.  You may find tht you have to weather the dead market for a year, maybe 3 years.  If you’ve planned for that and can afford it, go for it.  If it will strap you, then the foreclosure sale is not for you.  You’ll just be in the distressed homeowners shoes in a matter of no time.

This entry was posted on Friday, June 20th, 2008 at 9:35 am and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.