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Do Foreclosures Make Good Rental Real Estate

Nov 3, 2023 | Real Estate

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Even, perhaps especially, in an economic downturn, people are trying to make a living in the real estate market. “Flipping” houses used to be a great way to make a little cash, but not now. Many are now looking at long-term cash prospects, such as renting property, and {Business Area} foreclosures seem to be a good start. But are they? Let’s take a look.

Finding a good rental property isn’t easy. It’s not like shopping; you can’t go into a real estate store and grab the first house off the rack that looks good on you. It’s a process of investigating, gaining knowledge and being realistic. This is especially true when looking at {Business Area} foreclosures.

Homeowners who suffered foreclosure were unable to pay the mortgage. We all know that. What people usually don’t think about is that the homeowners were probably also unable to pay for upkeep. This means that you, as the buyer, have a larger possibility of buying a money pit rather than a moneymaker. Keep this in mind as you look over a few tips for finding good rental property:

Location – Since you’re looking at foreclosed properties rather than properties that are already set up for renting, you can’t check established rental records. However, you can ask your real estate agent for a list of areas with less people moving out and more moving in. As well, look at areas with surrounding retail development. New shopping malls, theaters and restaurants will bring in more people to an area.
Addition and subtraction – It’s time to do the math. Ask your real estate agent for what the going rental rates are in the area you’re looking at. You’ll need to find out if the rent you can charge will take care of expenses as well as bring you profit. Figure the yearly income you can expect to make and then subtract mortgage payments and operating expenses. If your math produces a negative balance, don’t buy the property.
Taxes – Once you pay expenses, your income is taxable. Now, while you can depreciate rental property, you can’t depreciate the land it’s on. Talk to a real estate agent or accountant to decide whether it’s worth it or not.

If you follow these three tips and remember to pay attention to the amount of repair needed, you might just find some fantastic deals on {Business Area} foreclosures. Take a little time to make sure renting is for you, and then get started.

If you are considering selling your home, be sure to contact us at (877) 360-5650 or email us at steve@cashofferonhouse.co so we can provide you with a Fair Cash Offer on your {Business Area} house.

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  • Mark and Michelle D

    When we got married we thought we would keep my old house and rent it out. Seemed like a good idea at the time-a little extra money coming in and the house would eventually get paid off… Wrong! The tenants messed the place up, called for us to make repairs all the time (things that we know they broke), were late on rent, skipped out on the lease, we’d have to clean it up and wait for someone new to rent it to (while making the mortgage payments)-we were sick of it! Luckily Steve and Kim from CashOfferOnHouse.co provide a great service. We didn’t have time to take care of cleaning it up to sell and finding a realtor that does what they say they will do (we have had issues with realtors not performing in the past-but that’s another story), but Steve and Kim had no problem taking it in what was its current condition. They gave us a fair cash offer and closed really fast. All-in-all they really got us out a situation we were tired of dealing with. Can’t recommend them enough!

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