True or False!

Although many real estate investors have taken foreclosures as promising investment opportunities, there are others who find the same fraught with risks. They believe that foreclosed properties do come at deep discounts, but alternatively demand heavy repair costs. Furthermore, title issues may also pose other problems.

It is true that Texas wholesale real estate has its own set of setbacks. However, the risks do not rule out the benefits. In the words of an expert, "Like everything in real estate, risk and reward are proportional; the big potential reward comes with big risks."

See the light, not the darkness :

If you are also interested in Texas real estate investing, but can see only the cons, then just scan through these common myths. You will then know the true picture of investing in Texas wholesale real estate.

• Loads of work: As foreclosed properties are often neglected by the original owners and are sold "as-is", investors believe that the expenses incurred and magnitude of repairs will be high. The truth is that while some properties may be like this, the others might demand only the basic revamping work like painting and carpeting.
• Colossal discounts: Investors expect to purchase foreclosed properties at deep discounts sometimes as much as 50% or more. However, some properties may e be sold at a meager 10% discount. In such a case, they do not make a deal at all. Investors must make a decision on the basis of the property’s condition and market research and not just the discount percentage. A property with a 10% discount may be in a better condition and may demand a better sale value than the other offering 80% discount.
• Risky venture: Investors believe that buying a foreclosed property is risky, as it may be burdened with old debts, liens or taxes. As this may be true for properties sold at auctions, it does not hold true for REO properties owned by the bank.
• No inspections: Properties sold at auctions cannot be inspected. However, this is not true in case of REO properties. You can inspect the property, assess the repairs cost, estimate profits and then make the deal.
• Only for cash-rich investors: Some investors believe that foreclosed property investment is only for cash-rich investors. As these properties often come with a "cash-on-sale" option, they can be purchased only by cash-rich investors. This is not true. While you cannot expect the seller bank to provide finance for the foreclosed properties, other lenders like conventional financers, private money lenders and the like have a host of financial solutions for investors.
• As banks are burdened with foreclosures, they might provide loans to get rid of the same: Certain investors believe that banks would provide real-estate investors with financing options, in a bid to get rid of their foreclosed properties. However, this is not true, as bankers or lenders would not want to be further burdened with more foreclosures and unpaid loans.

Thus, investors must be ready with their qualification letter from their lender before entering foreclosed property investment.

Foreclosed property investment differs from regular real estate investment in more than one way. Thus, if you are interested in this kind of investment, a smart solution is to employ the services of an experienced real estate wholesaler. These real estate wholesalers work with the motto of providing knowledge, resources and opportunities to investors interested in foreclosed property investment.

The author, Robert Wills is attached with New Western Acquisitions, a real estate firm who specialized in real estate investment properties,houses and real estate wholesaler.