Buying foreclosures to use as income property

Buy Foreclosures for Income Property

A lot of investors talk about buying REO property as a chance to purchase undervalued property to flip it at a higher price. However, there is another property investing technique that many times goes unnoticed. It's the rental market.

So what do bank owned properties have to do with rental properties? A lot, actually, according to one San Jose property management company. Let's focus in on two major points here: Purchase price and rental price.

Foreclosures impact purchase prices

First of all, foreclosure in the area affect the purchase price of a home, which in turn affects the investment value of the home. If you are not able to purchase a property at below market value, you will have a difficult time keeping a positive cash flow on the property.

Foreclosures have an effect on rental prices

Second, foreclosures affect the rental market by kicking former homeowners out into marketplace to create demand for rental properties. When there is a higher number of potential renters competes for a limited number of properties to rent, the price is going to increase or at least remain stable. This can help ensure a stable, positive cash flow for the investment.

Because of these foreclosure factors, savvy residential property invetors are stepping up to the plate to participate in the foreclosure investment opportunities. In fact, few rental markets in the United States are suffering, and that’s precisely because more people than ever are being forced to rent.

One Colorado Springs property management firm says that rates of vacancy have gone down significantly in 2010 over 2009 rates. This is good news for real estate investors who are interested in snapping up Colorado Springs rentals as the market seeks to correct from the peak experienced in 2006.

---

Add this page to your favorite Social Bookmarking websites