Bargain Seekers Seek Out
Foreclosed Homes

Bargain seekers buy up Detroit foreclosures

Investors from both the U.S. and abroad have descended upon Detroit, purchasing foreclosed homes in bulk, writes Greta Guest for the Detroit Free Press. In February, home sales were up 49% in the city, which led the U.S. in the number of foreclosures last year. Many buyers are snatching up multiple properties with the hopes of selling them back to investors to rent them out. Homes in Detroit's "better neighborhoods" garner $850 a month, she writes. Many hope to later sell the homes and are betting that the local market will improve within the next five to 10 years. With so many foreclosures on the market now, "banks must sell in bulk so they don't get overwhelmed with property," Ms. Guest writes.

However, closing on a bulk foreclosure deal with a bank can be tough going, according to the article. While investors may look to get homes at 20 to 25 cents on the dollar, banks holding Detroit properties are seeking 30 to 35 cents on the dollar, she says.

Drawbacks to renting out your home

Homeowners are opting to rent out their residences instead of trying to find a buyer, but being a landlord isn't easy. An article in the Post and Courier of Charleston, S.C., advises that owners consider the financial aspects when leasing out a home -- landlords may have to pay to fix up the home before leasing it out, they'll also be on the hook for damages that renters may inflict on a property, and landlords sometimes face lags of 30 to 60 days between tenants, making monthly mortgage payments difficult.

Landlords should take these precautions: check tenants' background and credit, consider hiring a manager to take care of day-to-day property needs, and consult with an accountant before renting to understand the tax issues associated with being a landlord. Homeowners considering renting out a property for less than a year may want to reconsider, the article says. When it comes time to prep the home for resale, landlords may find that the cost of fix-ups may wipe out any profits made from the lease.

Apartment buying tips

When buying an apartment, what features should you look for to get a space with the greatest resale potential? According to Manhattan real-estate site UrbanDigs.com, the top four qualities are location, views, square footage, and the amount of sunlight the apartment gets. After that, the apartments with the best resale values, according to the Web site, are those that offer:

While these tips were created for apartment buyers, they are good pointers for the purchase of any home. No doubt all buyers would prefer spaces that can grow with their needs and be adapted to suit their desires.

Foreclosure bus tours in D.C.

Earlier we wrote about the abundance of foreclosure bus tours in California -- in which prospective buyers visit foreclosed properties en masse. Now, writes Nick Miroff for the Washington Post, these tours have come to the Washington, D.C., area. On Sunday, first-time home buyers, investors and the curious boarded a green passenger bus to tour vacant, bank-owned properties in Northern Virginia. Also on the tour were a home inspector, two lenders and a real-estate attorney, all offering pointers on buying foreclosed properties.

Many buyers don't realize that when they purchase a bank-owned property, they are buying "as-is," said one real-estate agent on the tour. Buyers would have to reconnect utilities to find out whether a home has any broken pipes or whether the septic system works, the agent said.

The tour illustrated the kind of price breaks house hunters can find today in Northern Virginia One of the properties toured Sunday was a townhouse that sold for $519,000 a year ago and is now listed for $399,000, Mr. Miroff writes.

While the house hunters were eager to find deals, the pain that the homeowners who owned these residences must have felt upon losing their homes weren't lost on them.  Noted one potential buyer as he eyed one brick rambler with hardwood floors and a finished basement, "This has obviously been kept up by somebody who cared for it."

Ms. Kim is a senior editor at RealEstateJournal.com.

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