FHA foreclosures are one of the best places for novice real estate investors to look to pick up prime properties at a discount. The Federal Housing Administration makes loans to help many people buy or renovate their properties. Often, they are a lender of last resort, making loans that traditional banks would not consider. As such, they have a high rate of defaults. The result is that one of the best investment opportunities around are FHA foreclosures.
FHA loans are not made by the government. They are made by banks, but the U.S. federal government guarantees the loans. That means that if the borrower defaults, the government is on the hook for the mortgage so that the bank doesnt have to worry about losing money. Essentially, this means that when the home goes into foreclosure, the government owns the home.
The FHA relies extensively on an auction system to get rid of excess properties. People who are aware of FHA foreclosure auctions can often pick up good deals at the events. Many people who have been involved in home flipping for years have used FHA auctions to generate many of their properties. They buy the properties, fix them up, and sell them for a...
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