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Questions to ask yourself before investing in real estate

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When you are buying foreclosed properties as an investment, you want to be certain that you don't invest more money than you will be able to get out of them. So here are some tips on how to keep your costs down on your foreclosed properties, and your profits up.

1. Make wise decisions when repairing or renovating a property. If you want to update parts of the house, the greatest returns on your investment will come when you update bathrooms and kitchens. When people are looking to buy a house, these are the two items that they look at first. They can be a main selling point, and they will enable you to ask for more money.

2. Do everything possible to keep your repair costs low. If you have a lot of foreclosed properties in the same general area, contact a company that is local to handle your repair on your properties. More often than not, they will be willing to negotiate a discount because they will know that they have work, and you can take advantage of a discount, therefore increasing your profit.

3. Remember that you should be cautious when you are taking part in an auction. Even though this is a very common way to buy a foreclosed property, that doesn't mean that you shouldn't do your homework. Before the auction you should go and look at the property in person, to see what kinds of repairs are required. You also need to make certain that the title is clear, otherwise you may find that you are paying more than you expected.

4. Although you may want to resell the properties right away, consider leasing or renting the property instead. This is an excellent way to still get the mortgage paid with some left over. Another good thing about renting or leasing a property is that the cost of repairs that are done on the house can be written off when you are filing income taxes.

5. Once you are familiar with the whole foreclosure process, and you are comfortable with buying, renting or leasing, or reselling foreclosed properties, it's a good idea to have more than one foreclosure deal going at once. With multiple foreclosure properties, you will find that you have a good flow of cash coming in each month, and you don't have to depend on one lease or sale of a single property.

There are two last things that you should remember about buying foreclosed properties. The first thing is that you should look for properties in the best neighborhood that you can find, and that you can afford. When you are selling home in a neighborhood that has good schools, convenient access to grocery stores and banks, and a low crime rate, you will find that you will sell faster than a property in a less desirable neighborhood.

The second thing is that you should make sure that the former tenants have vacated a foreclosed residential property before you purchase it. The last thing you want to have to do is to evict people, or be stuck with a mortgage that the present tenants can't pay.

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