Short sales and foreclosures are great properties for everyone — even the average investor. They can be a great investment platform even for a newbie.
There are lots of stereotypes and “misinformation” from TV networks like HGTV to friends you admire and listen to. I know many people who will not even consider these types of sales due, in my opinion, to misinformation.
The first thing people say when they find out our “type” is that we are crazy! Then they proceed to buy a new home or a “traditional” sale. Everyone is allowed to have their own opinion, this is America after all. In my opinion though, ignoring this source is leaving great buys on the table. ESPECIALLY since the market is recovering and “most” traditional buyers want above market for their house.
We were lucky or unlucky enough to be the first in our group of friends to buy a house. Although both of our parents are living the “white picket fence dream,” we started with a clean “canvas” when it came to current times and views.
At the time we bought our first house, our realtor took off all short sales because they took too long. Other than that there was no “criteria.” At the time we were novices and didn’t know any better. As hindsight is 20/20, we were lucky to have this clean slate. Our discovery of this niche, by accident, has been an amazing “feather in our cap.”
Our Experiences with Short Sales and Foreclosures
All five of our properties have been a type of distressed property whether a short sale or a foreclosure. Our first house was a “totally cosmetic fixer” on the inside. It had a newer roof, a water heater, windows etc., but inside every room needed some kind of work. At the time this was perfect. It was a slow fix and it ended up turning into a great investment.
The problem was we could not duplicate it for future investments easily. We spent the first month working 60+ hours a week on the house. At least one weekend a month for the next 14 months was spent fixing up the parts of the house we hadn’t finished. This was possible in the beginning when I was unemployed and my husband was on house hunting leave. Slowly as both of our careers developed this became a burden. While totally doable for a personal home where we could work on it as time went on, this is NOT possible for an investment.
We discovered short sales on accident while attending my sister-in-law’s graduation. A friend introduced us to a great area in Charleston. We had been looking for an investment in the Virginia Beach area and couldn’t find anything. As stated below our “fixer” foreclosure was unfortunately not an option. Short sales become the answer to our prayers. They were great condition, move-in ready, and at the same price as destroyed foreclosures. While they took longer, had more paperwork, and sometimes fell through, they were cheap and without the work. Plus the ones we bought in the beginning were in GREAT condition because the sellers voluntarily gave them up!
As always, this was our experience, so take it with a grain of salt. The market has been improving decreasing the number of these properties and changing the way they are operating. While we have become choosier, we still love these types of properties.3