Want to know the best strategy for real estate investments in Chicago? Buying foreclosed properties in Chicago is now a powerful strategy among experienced investors. It helps in reducing the initial costs and heightening the profits. No matter, the property is in which phase of the foreclosure process, the discounted sale price allows investing in a property even with low capital. Not only this, but it also increases the potential return on your investment.
Savvy real estate investors always look for opportunities to connect with distressed homeowners. You can come across several investment opportunities with a high foreclosure rate, but only if you adopt the right strategy and approach. Usually, there are four phases in which you can buy a distressed property. They are pre-foreclosure, auction, real-estate-owned (REO), and government-owned.
Coming to real estate investments, many investors buy a distressed property at the REO phase as it is considered to be the easiest and safest approach. However, the reality is that most often investors fail to realize that the foreclosure process is lengthy and strictly regulated by the judiciary in Chicago. As a result, you may face tough times to find out a great deal. So, if you are also looking for ways to make your real estate investment process easier yet profitable, then keep reading. Here, we will help you learn some simple steps for buying legitimate Chicago foreclosures from the bank.
Seeking Foreclosed Properties
Perhaps you may find a wide array of options while seeking a foreclosed property to buy in Chicago. With a lot of inventory continually coming into the market with each passing month, you may find yourself overwhelmed with options.
Therefore, it is very important to remain focused on your business objectives. For this, you should conduct extensive research and identify just a couple of upcoming neighborhoods in Chicago. This will help you to align with your investment goals as well as ensure the greatest potential for a high return on investment.
The next essential component is determining the type of property you are seeking to invest in – a condominium, a single-family building, or a multi-family house. This will narrow down your search to a better manageable scope.
Prepare a Budget for Repairs
Did you know that several properties are foreclosed only because the homeowners could not make the mortgage payments? This means that they were even not capable of spending money on proper maintenance and repairs.
These properties are usually neglected and thus they deteriorate quickly, especially during the harsh winter seasons in Chicago. That’s why you should always prepare a budget for repairs beforehand.
As there are several ways available online to calculate the cost of repairs, you can easily find ways to analyze real estate investments and valuation methods. This will help you to evaluate a house efficiently.
Research Hidden Costs
Researching is one of the most essential steps before purchasing Chicago foreclosures. Although the bank may have included the unpaid tax and lien amounts into the sale price, you should not consider it as a given.
No matter you determine that there are no liens on the property, this does not mean that the property is free of any fees associated with the purchase.
Buying a foreclosed home in Chicago can involve potentially huge hidden costs such as homeowners and condo association (HOA) fees or any other legal fees.
Look for Potential Profit Estimates
Always try to research the last 6 months of comparable sales in the neighborhood where your investment property is located. You can gather this information from public records or a real estate agent.
Once you have the information in place, select at least three to four properties that match close enough to your potential investment property in terms of number of bedrooms, square footage, number of baths, and other amenities.
Now, compare these properties based on how your foreclosure investment property will look after buying and renovating the house. Then run the calculations with the formula: Profit = Market Value- Sale price, Repair costs, and Closing costs.