California real estate investing may very well be the next gold rush for those who invest in foreclosure properties. According to real estate information experts, DataQuick, investors purchased nearly 25-percent of all foreclosure properties sold in the Golden State during the first half of 2010.
California real estate investing can be a bit intimidating for investors who aren’t familiar with buying foreclosure homes. In order to achieve success in the foreclosure niche, investors must become educated about the California real estate market and real estate laws. This is of particular importance for investors who purchase foreclosure homes for use as rental properties or to offer creative financing options such as seller carry back mortgages and lease options.
California is known for having some of the strictest landlord/tenant laws in the United States. Real estate investors who have not purchased foreclosure property are encouraged to work with a real estate lawyer to ensure they comply with California real estate laws. Attempting to invest in California’s real estate market without legal counsel could lead to costly fines. Investors can learn about all facets of real estate laws by visiting the California Department of Real Estate website at DRE.ca.com.
According to the U.S. Census Bureau nearly a half million people move to California each year.
New residents require housing. Investors who take time to understand the housing needs of new residents can reap tremendous profits.
When people relocate they tend to prefer easy access to interstate systems, healthcare providers, restaurants, and shopping. They seek out homes in areas with desirable school systems. Investors who research housing trends and review housing prices and rental rates can better determine how to price properties to attract tenants or buyers.
Another popular investing niche involves selling houses by utilizing creative financing options. In today’s economy, qualifying for a home loan has become challenging for buyers with blemished credit.
Many California residents want to buy real estate but cannot qualify for bank financing. Investors can help buyers enjoy the benefits of homeownership by offering seller carry back mortgages or lease options.
Lease purchase option agreements can be a great choice for individuals who want to buy a house, but do not have sufficient credit or funds for a large down payment. Buyers provide a down payment and a portion of monthly rent payments are contributed toward the home purchase.
Lease options typically extend for 2 to 3 years; providing tenants time to rebuild or establish credit. Buyers obtain financing through a conventional lender when the lease option expires. If buyers are unable to obtain financing, investors can extend the lease option or enter into a new purchase agreement with another buyer.
Seller carry back mortgages require investors to act as the mortgage financier for all or part of the purchase price. Most investors offer partial financing and require buyers to obtain a mortgage loan for the balance.
Seller carry back financing terms normally extend for 2 to 3 years, but can be arranged to suit the needs of all parties involved. Buyers refinance mortgages through a conventional lender when the contract expires. Lease options and seller carry back contracts should be executed by a real estate lawyer to ensure they are legally-binding if either party defaults.
Many opportunities exist to succeed in California real estate investing. Investors can broaden their chance of success by developing a solid network of real estate professionals and creating an investment plan. Investors considering buying investment property in California should develop strategies now because real estate prices are expected to increase throughout the year.
Simon Volkov shares more strategies to profit from California real estate investing. His website includes a comprehensive real estate investing article library covering topics of buying foreclosure homes, lease options, subject 2, probate real estate, and more at www.SimonVolkov.com.