Investing in Foreclosures for Dummies

With foreclosures rising around the country — Realty Trac estimates than the number of houses entering foreclosure was 25 percent higher in January 2007 than in January 2006 — more investors are getting curious about investing in this end of the market. “Some people are using the phrase ‘tsunami;’ there’s going to be a tsunami of foreclosures,” said Dave Jenks, co-author of “The Millionaire Real Estate Investor.” “For the people who are pros at dealing with foreclosures and have the infrastructure of information and wherewithal … they will take full advantage of this.” In Valencia, California, foreclosure investor Daryl White estimates that he needs to buy a property at 30 percent below the price he can sell it for after he fixes it up and pays carrying costs for several months. Obviously every property is different, but is that a reasonable rule of thumb here in Brooklyn too? What other tips would those with experience in the area offer to newbies?

Update: We just got a press release from Property Shark with some interesting data on local foreclosures. There were 354 new residential foreclosures in New York City (5 boroughs), an overall decrease (-16.7%) from the third quarter of 2006 (425 foreclosures). Staten Island had the highest foreclosure rate per household in Q4 2006, 250% higher than Brooklyn and seven times the rate per household in Manhattan. Sixteen of the top-20 zip codes for foreclosures were in Queens and Brooklyn. The biggest surprise to us was in Brooklyn, with new foreclosure auctions down 34% from last quarter and at two-year lows, stated Ryan Slack, chief executive officer, PropertyShark.com.
A Flood of Foreclosures, but Should You Invest? [MarketWatch]
Photo by Sybil Star