When hunting for foreclosures, what is typically a good profit margin to seek in terms of % of market value?

Answer 1

You should pay a maximum of 75% of market value, additionally deducting for any repairs/upgrades which may need to be performed on the property. While 25% may sound like a tidy profit on such a deal, bear in mind that you must insure the property while holding it for resale, as well as handling utilities and upkeep. Of course, you will also have financial holding costs until the property is sold.

Given the current foreclosure market and the losses to lenders, you might look for a considerable amount of time before you find such a property. Most foreclosures are sold at values exceeding that which is appropriate for 'flippers'.

As well, consider the current state of the real estate market. 'Market value' when you purchase is not guaranteed to remain the same or increase while holding for sale. It sometimes decreases, and you also need that knowledge if possible, since you do not want to be stuck buying a property in a declining market.

Answer 2

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