Foreclosure Essay -- Real Estate

Recent setbacks in the mortgage and support sectors of the economy ask modified the process of real dry land acquisitions. Specifically, entry level investors with un-established or insignificant credit recital have experienced difficulty securing collateralized loans with matched interest rates. This is not to say that a weak credit history was disregarded prior to the real estate and bond market cave in in 2008, though, it has certainly become more difficult to attain financing for the purchase of real property.1Fortunately, the proposed scenario for this essay indicates that I, the investor, acquired $150,000 cash to purchase a apprehensive property, which presents a unique opportunity from both investment and financing perspectives. However, achieving the greatest return on my investment requires a solid financial strategy, which includes1. defining my risk parameters, familiarizing myself with the process of purchasing a distressed property, and do thorough due dilig ence, prior to engaging in the purchase.1. Exploring my financing options1. Estimating a potential return on investment (ROI)For this exercise, I go forth steering on purchasing a distressed property to generate term of a contract income, as a long-term investment. Therefore, the following sections of this essay will talk about my financial strategy as is relates to a distressed real estate purchase.DEFINING RISK PARAMETERSA Brief Discussion of Risk prudence Regardless of investment type, an investors portfolio must account for risk. Whether it relates to stock or real estate acquisitions, risk directly correlates to the returns one can endure on an investment. Accepting higher levels of risk typically indicates that potential returns c... ...ategy, apt(p) $150,000, I chose to pursue an all-cash purchase of a distressed property, located in a generally stable area along the outskirts of Philadelphia. The property will likely be a two-story, 2 bedroom, renter- occupied row home, priced in the midst of $115,000 and $125,000. The purchase price leaves approximately $25,000 - $35,000 cash, which I can use towards peachy expenditures, and as a financial buffer in the event of tenant default. Additionally, from my knowledge of rental rates in the area, I am assured that I can earn $800 - $950 per month, which yields a ROI of 8% to 12%. My decisions were establish on a logical and well-planned approach. Although accounting for risk is imperative, and success is never guaranteed, following my detailed financial and investment approach for acquiring a distressed property can maximize my present and future returns.