How to Make Profit on VA Foreclosures

You can make a profit on VA foreclosures by remodeling and reselling.

VA foreclosures are properties that have been financed by veterans who have defaulted on loans and are eligible for purchase by new owners. Remodeling and reselling is the best way in which to make money on VA foreclosures. This process of taking damaged or out-of-date property and updating to turn around for quick sale is commonly known as "flipping. "

Instructions

VA Foreclosures

1. Determine the marketability to make a profit on a VA foreclosure first by area. Contact a real estate agent who can provide you with a market analysis for the neighborhood and data about homes on the market, recently sold homes and homes currently under contract. This will provide a picture of how much of the investment in the VA foreclosure will turn a profit and how quickly it will turn a profit. Schedule time to view the property and evaluate any damages before purchasing. In some cases, the bank owner will do some repairs on the property, however, most VA foreclosures are sold "as is," meaning that any and all repair work would have to be completed by the new owner.

2. Before purchasing a property, evaluate how much of an investment would be spent on rehabilitation or repairs. Depending on the result of these findings, you can determine whether it would be profitable to invest in the foreclosure and resell it or whether the repairs and rehabilitation would chip away at investment potential. The goal is to maintain a return on investment over and above the cost of repairs or rehabilitation.

3. Complete a contract to purchase. Be prepared to do work immediately to put the property up for resale. Should a property be move-in ready and not require repairs or rehabilitation, be prepared to put the home on the market immediately. The longer the property is unoccupied, the less of a return you will make on an investment. When making repairs on a VA foreclosure--and most properties do require work--hire only contractors that are licensed and bonded. To make the most profit on a VA foreclosure, upgrades in the master bedroom and kitchen often will net the highest returns for an investor.

4. Evaluate the work done by the contractors. The best way to do this is to hire a licensed property inspector to validate that all repair work has been completed to code. Doing this on the front end of the investment will mean less repair work once the property is under contract with a buyer and will save money and increase the profit margin for an investor.

5. Hire a real estate agent to market the property. Allow your agent some time to find a buyer and negotiate the transaction. Once a contract for purchase is written, closing typically will take place within 30 days. It is at this juncture that you will see proceeds and profits.

References

• VA Foreclosed Homes
• Foreclosures
• Foreclosure, Bank Owned and REO