US Foreclosure offers - too good to be true?

[Dunkgrease]

I am seeing many offers for sale of US properties under the heading of Foreclosure sales. These are properties with existing tenants with rental income paid by the US goverment. These type of deals show returns of >10%.

Does anyone have any experience of buying such properties? Is it too good to be true?

If they are legitimate, what are potential pitfalls, particularly as a foreign investor?

 

[aptmav]

I have been investing in Real Estate for over 15yrs and have experience in probably every facet of residential real estate. I have seen some advertised foreclosures with Government paid rents. I would imagine these are houses with SEC 8 tenants in them. The 10% return would definitely have to be verified. I would call the listing Broker/Agent and ask them what Government Program the houses are under. Hope this helps

 

[Dunkgrease]

Thanks

thanks for the advice. I will do as you suggest should I take it any further.

 

[RyanTucker]

I am seeing many offers for sale of US properties under the heading of Foreclosure sales. These are properties with existing tenants with rental income paid by the US goverment. These type of deals show returns of >10%.

Does anyone have any experience of buying such properties? Is it too good to be true?

If they are legitimate, what are potential pitfalls, particularly as a foreign investor?

This is exactly what I do. I have a lot of experience and NO the deals are not too good to be true. There are some great opportunities in the US - especially in Memphis with government paid rents.

 

[LVVR]

Actually house prices, especially in Las Vegas here are at an all time low, so it's a good time for buyers to purchase but a bad time to sell.

 

[MarcusFlorence]

If the properties sell in this system is authenticate and have legal papers then you can easily buy them as these houses are cheap in comparison to other houses and can make your dream possible of own home.

 

[darrmont]

have a long hard look

There is an awful lot of rubbish being sold to investors and there may be some opportunities but beware of the potential for real headaches with these properties. They are usually very old and can effectively be a bit of a bottomless pit for throwing money in, property appraisals are not worth the paper they are written on. if you want to buy a property, get on the airplane and go and see the property, do not take anyone's word on it. Tenants will leave and often trash your property and leave you with a large bill for rehabbing the property, also maintenance costs can run up very easily and when you get a message to say you have to put on a new roof, it is very expensive and you have no idea whether the price is fair or not and whether the work will be good, bad or indifferent. You may be better sticking to buying in a region where you live or visit regularly. BEWARE OF THE USA, IT IS AN OLD CRUMBLING AND DELAPIDATED COUNTRY IN MANY PLACES

 

[Serene]

I agree that there are an awful lot of properties being offered as 'BMV' with high returns in areas which normally one would never consider. But I too would emphasise that research into each area of interest is a MUST. One method I use is to check the Fair Market Rent (FMR) listings for each area that a particular property of interest is in. This is set by the Housing and Urban Development (HUD) of the local Government. It gives the rental figure that you would expect from a property in a specific area. I like properties that are rented out to Section 8 tenants because as mentioned in an earlier post, a proportion of the rental return is paid by the US Government. Section 8 tenants are often misconstrued as the equivalent of DSS here in the UK but this is not the case, for a start they have to be working and a Section 8 voucher is almost like a Willy Wonka 'Golden Ticket' and they only get one chance. If they do not abide to the rules, and lose their entitlement, it can never be regained. So the vast majority treat the property as their own and create an exit strategy for the owners by the simple fact that they may wish to purchase the property from you after a number of years.