Investors are purchasing cheap Rochester, MN foreclosure homes and rehabbing them in order to lease them out or flip them and make a quick profit. When you buy a property at a foreclosure auction or your purchase a REO foreclosure from the bank, you are getting a home at a deep discount. However, most of the homes need some work because their former owners did not have the money to maintain them. When bidding on a foreclosure home or purchasing an REO, make sure you budget the repair costs into your purchase price. If you are handy and can do the renovations yourself, you will save a lot of money. There are online rehab calculators that you can use to get an idea about your costs. Also, it’s a good idea to inspect the home before you purchase it and get at least three estimates from contractors.
Here are some tips to make your rehab project a success:
- Purchase a property that is similar to other homes in the neighborhood. You will have an easier time renting or selling the property because it conforms to the other homes in the area.
- Allow plenty of time to finish your rehab project.
- Make improvements and repairs on items such as remodeling the kitchen and bathrooms, changing the flooring and improving the outside curb appeal of the property that you can expect to receive a return on your money. Don’t waste it on putting in a home security system or new windows and doors.
- Maintain accurate records of all your repairs and supplies costs.
- Stay within your budget.
- Use materials and upgrades that are appropriate for the home and neighborhood to attract the right buyers or tenants. For instance, if your target buyer is an urban professional, then you will need to use granite countertops and hardwood floors.
- Buy your own material to avoid contractor markups.
- Supervise contractors and subcontractors to make sure they are doing the work on schedule and actually showing up.
- Maintain a list of vendors that you want to work with on a regular basis.
- Learn from any mistakes so you won’t repeat them again.
Rochester Market Snapshot
To get an idea what homes are listed at in the Rochester, MN area, according to Trulia, the average listing price was $204,510 for the week ending Aug 10, 2011. Popular Rochester neighborhoods include Northwest with an average list price of $206,381, Slatterly Park with an average list price of $98,347, Meadow Park with an average list price of $115,916, Historic Southwest with an average list price of $225,551, and Kutzky Park with an average list price of $141,259. Other hot neighborhoods include Viking Park, with an average list price of $162,757, Apple Hill, with an average list price of $213,539, Northrup, with an average list price of $122,425 and Viking Hills, with an average list price of $178,329.
Rochester foreclosed homes are good values. You don’t have to spend a lot of money rehabbing them either. There are hundreds of homes that just need minor repairs. While there are foreclosure homes that are dilapidated, more often than not, you can find a great bargain on a foreclosed home that just needs cosmetic repairs. Many investors borrow from private money lenders to do their rehabbing because private lenders lend quickly, and they don’t have any underwriting guidelines to follow like traditional lenders. So if you need money to purchase your property or rehab it, you might want to consider borrowing from private money lenders as your first choice, and taking out a mortgage from a traditional lender if you plan on keeping the property for a longer period of time.