Where to Buy a Foreclosed Home?

Potential buyers of affordable housing may consider buying a foreclosed property. Foreclosed houses, sometimes called real estate owned (REO) houses, can be quite the worthy bargain if buyers know where to look.

Image Source: leawardinvestments.com

Foreclosures are properties owned by a bank or a lender after previous owners defaulted from their housing loans.  Getting the best deal may take some time, but chances are foreclosures may spare a buyer from thousands of dollars as opposed to buying a completely new home.

One may consider buying foreclosures from sellers who have missed mortgage payments, a short sale, a public auction, or an REO agent from a bank or a lender.  The last two are where people commonly go for a purchase.

Consider the pros and cons of buying from the four sources.  Missed payments sellers are usually motivated to keep the price at a minimum.  Auctions and short sales are convenient and quick. Banks also offer affordable options, plus more flexible payment terms.

Whichever way one will find and purchase a property, another key consideration is location.  It not only determines accessibility to school, work, and establishments that supply the homeowner’s basic needs. Checking across locations may also help buyers find the most affordable areas for foreclosures.  Since some locales are host to a surge in foreclosed properties, they will more likely have sellers scrambling to sell houses at lower costs just to move the properties quickly.

Some websites offer on-state, on-location foreclosure listings with other information relevant for prospective buyers.  This takes away some time and effort from the rather cumbersome process of finding houses.

Powered by online networking and consulting company Heavy Hammer Inc., USHUD.com offers free listings of government and bank-owned foreclosures. Get up-to-date and comprehensive real estate updates on this blog.

REPOST: Program Gives Renters Chance to Buy Foreclosed Homes

Foreclosed properties are typically sold to buyers.  In some places such as Milwaukee, however, they can be rented out and eventually sold to the tenant in the long term. Karen Slattery of the Milwaukee Neighborhood News Service.

The Marcheses are among the first families to move into the Layton Boulevard West neighborhood’s affordable Rent to Own Homes. Image source: urbanmilwaukee.com

Most tenants would rather not hear from their landlords. But Kelly Marchese is not one of those renters. She says she emails or is on the phone with her landlord regularly, to talk about things such as the chain-link fence that will be installed in her backyard this summer.

Marchese rents a house on the city’s South Side that was formerly in foreclosure and vacant, through the Rent to Own Homes program. The program was made possible by a partnership between Layton Boulevard West Neighbors, Inc. (LBWN) and Impact Seven, Inc., a private, nonprofit Community Development Financial Institution (CDFI) that serves as Marchese’s landlord.

The home is one of 24 foreclosed properties that these co-developers have purchased and are rehabbing to give people such as Marchese access to affordable housing in the city.

Applicants interested in renting the homes, with the idea of eventually owning them, are screened. The monthly rent is based on income.

Tenants who live in the homes for 15 years will be given about $37,000 in credit toward the purchase price, according to LBWN Executive Director Charlotte John-Gomez.

Marchese said that once she was approved to move into the home at 2030 S. 37th St. last summer, she had a hand in making decisions about the renovations. She said she chose the yellow color of the siding, for instance. “They want you to be happy with the house,” she said.

Kelly Marchese is settled in at one of the Rent to Own Homes made available through a partnership between Layton Boulevard West Neighbors and Impact Seven, Inc. Image source: urbanmilwaukee.com

The Rent to Own Homes development helps bring stability to the Layton Boulevard West area, according to John-Gomez, and helps stave off some of the havoc wreaked by the foreclosure crisis.

LBWN, a nonprofit organization created two decades ago by the School Sisters of St. Francis, is charged with stabilizing and revitalizing the Silver City, Burnham Park and Layton Boulevard neighborhoods.

The agency has operated the Turnkey Renovation Program for several years, in which it buys, renovates and sells foreclosed homes in the neighborhood at affordable prices, one at a time. John-Gomez said the Rent to Own Homes program resulted from taking the Turnkey project “to scale a little bit more.”

She said that LBWN receives a list of foreclosures twice a year, adding that she “doesn’t see the trend waning at any point.”

LBWN’s co-developer, Impact Seven, Inc., was founded in northwestern Wisconsin in 1970 to aid development in low- and middle-income communities.

Todd Hutchison, who oversees the real estate development branch of Impact Seven, Inc., said that his organization and LBWN pored over lists of foreclosed homes in the area that were owned by the city of Milwaukee or by banks to find places to buy. Not all of the properties they looked at were salvageable, according to Hutchison.

Those they purchased got new roofs, windows, furnaces and wiring. New plumbing was included where needed. “We are breathing another 100 years of life into these homes,” said John-Gomez.

Foreclosures occur because people are no longer able to pay their mortgages, the upkeep or the property taxes. Abandoned buildings create problems for the neighborhoods because they fall into disrepair over time, attract vandals and drug dealers, and become a danger to children, according to Hutchison.

As the foreclosed building loses its value, so do the buildings around it, he said.

Vacant houses are not the only problem for neighborhoods such as Layton Boulevard West. So are vacant storefronts. For that reason, two foreclosed commercial buildings, located at 3513 and 3519 W. National Ave. were included in the project, in an effort “reactivate those storefronts,” according to John-Gomez.

John-Gomez said that tenants have leased 11 of the homes to date. Negotiations are in progress with others, including tenants that will move into the storefront buildings.

The nearly $6 million project was made possible with loans and tax credits from organizations including the Wisconsin Housing and Economic Development Authority (WHEDA), Town Bank, the Federal Home Loan Bank of Chicago, the National Equity Fund, the Local Initiatives Support Corporation (LISC) and the city of Milwaukee.

The project is one of the finalists for this year’s Milwaukee Awards for Neighborhood Development Initiatives (MANDI), in the State Farm Building Blocks Award category, which recognizes a real estate project that improves the community.

John-Gomez described the news as “great.” Hutchinson added that he is pleased to “celebrate that we have had a little bit of an impact, even though there is a long way to go.”

According to John-Gomez, the tenants seem to like the idea of being part of a program nominated for an award.

Marchese said she is very happy in her new home and will begin painting her inside walls this spring. She said that she plans to choose earth tones and is anxious to get started.

The landlord will send a representative to her home for an inspection once a year.

Said Marchese, “I want him to say ‘wow.’”

Visit ushud.com for more on foreclosed properties and foreclosure listings.

Becoming a Landlord? Get a Foreclosed Property!

Renting out a property is a good real estate investment. It provides a passive source of income as long as there are tenants present. And with more and more people turning to renting as a choice for a starter home, the business of rental properties is an exciting prospect for the real estate owner.

Image Source: www.jamessansonelaw.com

A good source of homes for the would-be landlord to turn into rental properties is the market of foreclosed homes. Larger corporate landlords have taken advantage of this market, purchasing bad mortgages and foreclosed homes on a wide scale.

Purchasing a foreclosed property is similar to buying a regular property resale, with the added advantage that foreclosed properties are vacant and inexpensive, making turnover relatively quick. Landlords have the added benefit from this engagement by minimizing the time it takes for the property to be rented out.

Image Source: www.byrdrealtygroup.com

There is one drawback to foreclosed properties that make the choosing process lengthy. Some of the really inexpensive properties may need more work to make it livable, which in some properties can cost more than the estimated savings gained from purchase.

It is therefore important to choose the appropriate property to reduce upfront costs, as well as assemble a maintenance team before the purchase to have the home back to habitable condition in a short span of time for less.

Image Source: www.realestatebio.com

Renting out homes is a comparatively better option compared with selling in certain markets. Knowing where and what to buy can help iron out headaches surrounding the purchase of foreclosed rental property.

Those who are looking into investing in the real estate market as a rental property owner can check out USHUD.com’s extensive list of foreclosed properties for great bargains. Visit this webpage for additional information.

REPOST: New Report Shows American Dream Is Still Tangible

RISMedia recently released an article about a report that shows the American Dream is still tangible, to see the original posting click HERE to continue to RISMedia.

Clear Capital recently released its Home Data Index™ (HDI) Market Report with data through April 2014, showing that for many, the American dream is still accessible. Using a broad array of public and proprietary data sources, the HDI Market Report publishes the most granular home data and analysis earlier than nearly any other index provider in the industry.

“Very interesting dynamics are at play as we head into spring,” says Dr. Alex Villacorta, vice president of research and analytics at Clear Capital. “Though our April data suggests the spring buying season is off to a slow start, we aren’t concerned about the sustainability of the recovery. To be clear, there are lots of adjustments taking place in housing markets across the country. Everything from lender regulation, consumer confidence, investors tapering purchases, local economics, and rising home prices have forced participants to continually adjust to a market that has been anything but stable.

Best deals move from low-tier to mid-tier. Following more than two years of recovery, the mid-tier price sector now offers home buyers the best deals, relative to peak values. After 32.3 percent growth from the trough in 2011, low-tier deals appear to be played out compared to mid-tier deals (homes selling between $95,000 and $310,000 nationally), with prices still 30.6 percent off peak values. The strong rebound in the low-tier price sector left homes, on average, just 21.5 percent below peak values. Top tier homes are just 18.2 percent off peak values.

Early signs show the spring buying season is off to a tepid start in April. We observe quarterly rates of growth for the nation and three of the four regions virtually unchanged over last month. Stability in this new moderating pattern, back toward historical norms of 3 percent-5 percent annually, will help restore first time and owner occupant buyers’ confidence in the market.

Real estate is local again. Yes, moderating price trends are converging toward one another (with just a one percentage point spread in quarterly rates of growth for the top performing 15 MSAs). But underlying drivers, like distressed sale saturation and local job markets, remain drastically different. Between Chicago’s 39.7 percent and San Jose’s 7.9 percent, the spread in distressed saturation within the top 15 performing MSAs is nearly 32 percentage points. Chicago will likely see more demand from investors looking for great deals on distressed sales (with median prices around $160,000), while higher priced markets like San Jose (with median prices around $650,000), supported by a relatively healthy local economy, may see stronger appetites from owner occupied buyers.

“Generally speaking, we see price growth stabilizing throughout 2014, which should help boost the confidence and purchase activity from buyers on the fence,” says Villacorta. “Looking at home price trends by tier, it’s apparent the impact of investor activity has been concentrated in the low price tier segment. Conversely, the segment of the market that represents the middle 50 percent of all transactions is still more than 30 percent off peak values. This suggests that there is good price growth potential and could motivate enough buyers to sustain an overall rate of home price growth consistent with historical norms. The days of double digit price gains are behind us, and the market will continue to calibrate to the new reality of annual growth rates between 3 percent and 5 percent. A strong spring buying season might be a casualty of the major adjustments underway, but it’s no reason to ring the alarm bells quite yet.”


For more information, visit www.clearcapital.com.

Buying Beats Renting After Only Two Years In Most Markets

A recent study has shown that in over half of the U.S. metros, when deciding whether to rent a home or buy a home, that buying a home is the better financial decision when the potential buyers would stay in the house at least two years.

Buying beats renting after only two years in most markets.

In some areas the breakeven point between buying and renting is even sooner than two years. For example in Riverside the breakeven time is less than a year, Orlando is one year, Miami and Fort Lauderdale is a little over a  year. While larger metro areas the break even point took longer than two years. For example Washington D.C. is a little over four years, Boston is four years, Phoenix, San Diego, Minneapolis and Baltimore are all just over 3 years.

The reason the breakeven point is catching up so quickly between renting and buying is because rent keeps rising while mortgage rates have remained very low. This is leaving many to ask themselves why should I renew my lease when I can reach the breakeven point in so little time and live in exact same area. Still some renters need to overcome major obstacles before they can even think about home-ownership. Many cannot qualify for a mortgage or cannot save up enough for a down payment, which leads them to renting because its more flexible and far less frustrating to many.

REPOST: The Changing Landscape of Rentals

Erin Ruane discusses the changes that have occurred in the rental industry. To see the original  RISMedia posting click HERE or the image below.

America’s recent recession brought about many changes to the housing market, with one major impact being an increase of single-family rental housing units. Freddie Mac reports that the single-family rental market, not to be confused with multifamily, has expanded 16 percent (about 3 million units) since 2007 to total around 11 million single-family homes across the country now occupied by renters.

Factors contributing to the rise of those looking to rent a home rather than buy include uncertainty with jobs, negative equity and a large amount of foreclosures. Certain demographic trends, particularly with younger renters, are also driving this increase, such as a desire for amenities, flexibility and a desire to live in more urban environments.

A survey of renters conducted by Opinion Research Corporation showed that single-family rental homes are the fastest growing housing option in America, with 3.6 million homes built for owner occupancy now serving as rentals because owners lost them through foreclosure.

Based on MBA’s National Delinquency Survey, the foreclosure rate has skyrocketed from around 1 percent in late 2005 to around 4.3 percent today. With more than a million homes still in the national foreclosure inventory, that number is expected to rise as many of those will be converted to rentals in the ensuing years.

This trend is expected to continue, with five to six million new renter households being created within the next 10 years, likely caused from low inventories of homes available and tight credit conditions, according to the Bipartisan Policy Center. Many investors jumped into the market and snapped up single-family houses with the goal of renting them out to make bigger returns in key markets.

Not surprisingly, Homes.com has seen 34 percent of its traffic searching for rentals (single-family homes), and this number seems to be rising monthly.

According to data from the 2012 U.S. Census and analyzed by the National Multifamily Housing Council, 32 percent of U.S. households are renter-occupied, with 33 percent of renters living in single-family homes.

Who’s Renting?

The National Association of REALTORS® expects a strong demand for apartments to drive up rents 4.6 percent this year, leading many people to explore the possibility of renting a home.

Because of student loans, a tough job market and stricter mortgage requirements, millennials lead the pack of renters, with 43 percent of all renters falling under the age of 30. Gen Y are not the only renters, however, as 37 percent fall into the 30-44 year old bracket, with 22 percent between 45-64 and 16 percent over 65.

A real estate professional would obviously prefer to sell a home or find a home for their client to buy, rather than going the rental route. A savvy agent will think more about the immediate financial gains, but there are long term gains to be had as well.

Those renting may wind up eventually buying the home or will save up enough money to purchase another home, and will call on your relationship with them for guidance. Keeping your clients happy is the main goal.

In an analysis by Premier Property Management Group, out of Memphis, Tenn., it’s revealed that single-family home tenants are 25 percent more likely to remain in their current homes five years or longer, compared to just 22 percent of apartment dwellers, so it seems more stable than multifamily rentals.

Studies show that half of all renters, including approximately 60 percent of single‐family renters, anticipate becoming homeowners in the next five years. Of those, families with three or more members clock in at around 64 percent, and those with children under 13 register about 69 percent.

While the housing market is turning around in the early months of 2014, economic uncertainty and new regulations on mortgages should keep the rental market going strong in the months ahead. With more rental housing choices available today, property managers are more challenged than ever to make sure their vacancies attract tenants and rent quickly. Visit Homes.com for marketing solutions and resources to support property managers looking to fill their existing vacancies and add properties to their portfolios.

For more information, visit www.connect.homes.com.