Things to consider when buying cheap houses

There are many cheap houses on sale due to the increase in number of foreclosure houses after the economic slowdown. These foreclosed houses are a great opportunity to own a home for people who always wanted to buy a home and were not able to, because of the high price. Though buying cheap houses sounds like a bargain, not all cheap houses are a good investment option. Whether you want to buy an affordable home for your family or are interested in purchasing cheap houses just as investment options, there are some things you need to make sure to avoid losing your hard earned money on bad investments.

Condition of the property: It is necessary to conduct a thorough investigation of the property whether you buy the distressed property from the owner of the property, after bidding on an auction or even when you buy it directly from the bank. Condition of the home is an important factor when deciding if the property is a good investment option. Many times owners are not forthcoming about the structural and other defects as they feel that this might drive away potential buyers. It would be a good idea to take professional help to find out the estimated cost of repairs and use that to negotiate during the buying process. Also, you will be aware of what repairs need to be done before you move into the house or let it for rental.

Location of the property: Location of the property can be a major deciding factor before you buy cheap houses, as it is an advantage if the location is good. Whether you plan to stay in the property or you want to rent it out, it would be of help to have information about schools, hospitals, crime rates etc. You can use this information as a selling point when you plan to sell your house or let it out.

Expected potential returns: Always factor in the amount you will have to pay for repairs and other costs such insurance and taxes before you finalise the deal. Ask around and find out the rental rates in your neighbourhood and find out the costs for repairs and renovation. Only if you are able to make a profit after taking in the costs, it is advisable to go through the purchase.

Mortgage costs: If you plan to take a loan from the bank to purchase cheap houses then it is important to consider the cost of the bank loan when buying the house. If the home you have purchased does not give you the desired rental rate, it should not happen that you have an additional burden of mortgage payment. Purchasing such cheap houses would become more of a liability than an investment.

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