If you are interested in rehabilitating an older block of homes or if you want cheap land in order to buy build a home, you may be looking for a cheap deal. In some cities, there are homes in foreclosure or in various states of disrepair available for pennies on the dollar. Being able to purchase these deals can mean a good break for your rehabilitation business or building your own home. However, there are many pitfalls that you need to be aware of that come with cheap real estate.
The number one problem that you are likely to run into is issues with taxes on the real estate. When you obtain a real estate, you will be responsible for any back taxes on the property. Depending on the price and age of the property, this can be for more than the property itself. These will need to be taken care of in order to close on a property and become its legal owner. Real estate title services in your town will be able to go on a search mission for you.
Old work and old liens
House flipping became more and more prevalent once the housing bubble burst and homes could be purchased at less than half of what they previously sold for. For this reason and with an uptick of home flipping shows, some people tried their hands at home flipping only to find it a flop. Some of these short term owners wound up out of cash and owing contractors and other companies who applied liens to the house. Any and all liens must bet taken care of in order to own the property. A title service can help find liens prior to closing on the property. The truth is, the cost of liens can take a price that is considered a steal and turn it into a market value or higher property cost. Hiring a title service before attempting to close can save you heartache.
Taking care of post-dated liens
Depending on your state and jurisdiction, liens may be filed against the home up to a certain point. For instance, your city may allow for liens to be applied for unpaid house work up to six months after the work was done. If you purchase a cheap home after a disastrous flip that was started only 2 months ago, the lien may be filed after you take possession of the home. To deal with this, you should get title insurance on the home through a real estate title services company (such as TitleSmart). This will protect your interest in the home and make sure your inexpensive deal remains a deal.
Welcome to my website. My name is Larry Silva, and I want to talk a bit about private mortgage insurance. You may have heard the term PMI mentioned when you were in the process of purchasing real estate. When I first heard my lender talking about PMI, I was very confused. It was my realtor who sat me down and explained what private mortgage insurance was and when someone is required to purchase it. He told me that PMI is not lifelong insurance; it can be cancelled when the mortgage principal balance reaches a certain point. Once it was explained to me, private mortgage insurance was no longer a mystery or a confusing concept. I would like to pass on what I learned and hope that you find it to be of value.