Can I Buy an Occupied REO? The Pros and Cons.
There are circumstances where a tenant or owner still occupies an REO property. When you purchase a property directly at the foreclosure auction, many times it is still occupied. Or, the bank may have taken ownership and wishes to sell the property before it has become vacant.
The potential for a good investment makes this situation attractive to some buyers. With a tenant already in place, caring for the property and paying rent on time, investors see this as a great incentive to purchase the property.
However, this is the best-case scenario. A tenant may decide not to continue paying rent once you take ownership of the property. If the occupant is the former owner, they were unable to pay their mortgage at one point, leading to the foreclosure action. They could become unable to pay their rent as well. There is also the possibility of a disgruntled occupant inflicting extensive damage to the home and property that you will be legally and financially responsible for fixing. The eviction process can be expensive and time consuming. Also, there is the issue of personal liability. You are opening yourself up to insurance claims or other legal action should any issues arise on the property while it is under your ownership.
Before making this decision make sure you fully understand all of the potential issues that can arise. Consult an attorney regarding your responsibilities as a landlord and research the eviction laws in your area. An occupied REO can be a good investment provided the risks are acknowledged and properly addressed.
Island Advantage Realty
Island Advantage Realty, LLC has established itself as an innovator and leader in the REO market throughout Metropolitan New York and Long Island. With 20 years of experience handling foreclosed and residential properties, you can rely on our knowledgeable team of agents to assist you with all of your Real Estate needs. Trust the experts. Trust Island Advantage.
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