One of the biggest lessons I have learned and been reminded of over the past year is that of location. Location is key in any investment. There are a record number of foreclosures in the US right now. Living beside foreclosures devalues your property. Buy a foreclosure can bring forth an opportunity, though if 50% of all the houses in the same subdivision later fall prey to foreclosure you could be out of luck.
I had brought a home in a decent subdivision this past year. It was the second foreclosure in the 100+ home subdivision. It was a great deal. Since my purchase 10 other homes have gone into foreclosure. The neighborhood has not changed, but its reputation has. Realtors are avoiding the area. To say it honestly I messed up. Could I have seen this happening?
The subdivision was built by a national builder. What I found out later was that Country Wide secured 90% of the loans and most of the loans were subprime. If I would have done a little more research before I had bought I would have been in a better situation as the buyer.
I was talking with a local builder that also helped drill location into my head. He has the option to buy two pieces of property. Both are 3 acres. One is $50,000 and the other is $100,000. He can invest $200,000 into a home on both pieces of property. Afterwards the house built on the $50,000 lot would be worth $250,000. The house built on the $100,000 lot would be worth over $400,000. The difference is location. You are not always looking for the cheapest deal. You have to look for the best opportunity. Location can help guide that search.
In looking forward this year I will be concentrating on the 3 l’s. Location, location, location. There are some neighborhoods in Raleigh that are seeing increasing prices while all you read about in the news is the decline. There are foreclosed houses in Raleigh that are going for $300+ a square foot. That is what is going on.
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