Foreclosure real estate investing can be a profitable niche for those who take time to learn the strategies. Foreclosed realty encompasses a variety of properties including residential homes, vacant land, and commercial real estate. When buying foreclosure real estate, investors must be financially prepared to invest in property repairs or renovation. While foreclosed properties are priced below market value, homes requiring substantial repair can quickly deplete home equity.

Investors must engage in due diligence by reviewing comparable sales reports and obtaining home inspections, property appraisals, and repair cost estimates to determine the true cost of buying foreclosure properties. Several options exist for locating foreclosed properties at discounted prices. The most common is to attend public foreclosure auctions. All properties presented through auction are sold in “as-is” condition. Buyers must be prepared to submit payment in full within 24 hours once their bid is accepted. Once realty is transferred, property owners are responsible for removing creditor and tax liens and making necessary repairs.

With short sales, lenders agree to accept less than the full amount owed on the home loan. Properties are listed through realtors or sold directly through the bank. The short sale process can be complex and lengthy; taking up to four months or more to complete. Buyers must obtain prequalified financing prior to submitting an offer. It is important to note that banks rarely accept offers lower than the asking price unless property inspections reveal major problems.

Short sale houses can provide investors with a good deal, but may not be the best option for investors who participate in house flipping or plan to use the home to generate rental income. Buyers willing to wait out the process can generally purchase homes at 10- to 20-percent below appraised value. One way to obtain the best price on foreclosure properties is to seek out private investors who specialize in wholesaling. Some investors and investment groups purchase entire bank portfolios consisting of dozens of bank owned foreclosure properties. It is crucial for real estate investors to become educated about all facets of buying foreclosure properties. Many newbie investors are tempted by the low price tag of foreclosures, but fail to realize the costs associated with rehabbing the property.

There are two traditional ways to make money from property investment. The first being capital appreciation and the second being rental returns. Good rental returns incidentally affect capital appreciation to some extent it would be hard to segregate the two. Thus, this article will identify three indicators of a good rental property investment so as to help one that can form the basis of your next real estate property investment.

Firstly, good human traffic would be key if the investment property category that you are interested in involves shopping malls, strips and shop houses. Spend some time thinking about what type of crowd a rental property seeks to attract and then go down during the period in which you think the human traffic is at its maximum to have a gauge of the ground conditions.

For instance some rental property attracts the office crowd, then you want to analyze when the office crowd might appear like during lunch time and you can then go down during lunch time to estimate the crowd size and figure out whether your investment property investment will give you good rental yields.

Secondly, pay some attention to future developments in your area to figure out where the large shopping malls might develop and then purchase your property in the direction of progress as some real estate writers like to put it. The reason for this is that where there is development, there would be an increase in crowds and this would be in addition to any crowds that you might have noticed in the first point above and therefore increase you rental from your investment property.

Thirdly accessibility to transport is very important for rentals. When accessing an investment property for rental purposes, if your property is far out from the city but is readily accessible from the subway, bus routes or walking or the freeway, the rental of your property might be a lot higher than a property that is nearer the city but is very inaccessible. When determining accessibility, check if its connected to the freeway or whether public transport is readily accessible.

In conclusion, do spend some time thinking about what your tenant might want in a rental property of that particular class and you will be able to choose a property that can help you achieve good rental yields that is critical for cash flow purposes.