Because of our close proximity to military bases and other government installations, the Northern Georgia area is very lucrative to investors due to its strong rental market. Due to the nature of working for the military or the government, many families are relocated here for short periods of time (ranging from one to three years). Many choose not to buy which, in turn, creates a strong investor market. As an extra investor bonus, the rents continue to soar while property values remain relatively stable in the aftermath of the downturn in real estate in the early 90's.

Government cutbacks and the current economic slowdown have created a situation where we now have a large number of foreclosure properties available for sale through the Department of Veteran Affairs, the Federal Housing Authority (HUD/FHA), the Federal National Mortgage Association (Fannie Mae) and various other mortgage institutions. In addition, new home sales have been strong which has kept the resale prices low and the inventory high. In short, there are many motivated sellers and bargains abound.

There are many advantages to buying foreclosed properties: they are usually priced "below market" and the lenders will offer special financing, even to investors, in order to get the properties sold. Normal investor rules require 30% down payments for conventional loans while VA and FHA have all but eliminated their investor products. On their foreclosures, however, Fannie Mae and VA will finance with only a 10% down payment for investors (5% down for owner-occupant) (and you don't have to be a veteran). In addition, the lenders will contribute to closing costs, pay points and eliminate the need for mortgage insurance.

The down side is that foreclosed properties are sold "as is". The damage to the property could be major (but that should be reflected in the price). The majority of them only need inexpensive cosmetic repairs in order to be put into livable condition and therefore profitable as rental property. See also HUD Foreclosures.

 The resale market also offers some wonderful investment opportunities. Many sellers are paying on two mortgages since most of the new home builders wouldn't accept contingent contracts. They now are in a situation where they will consider any reasonable offer since their carrying costs are so high. How do you solve the problem of the high down payment? Look into the most underutilized government mortgage available for investors - the FHA 203(k) loan.

The FHA 203(k) is a rehab loan available to owner-occupants and investors alike. It allows an investor to purchase a property and complete all repairs and improvement work with one loan. The down payment is 15% of the purchase price and all the improvement costs, so long as the improvements exceed $5000. The type of repairs allowed are the obvious ones such as structural work but it will also allow for painting, recarpeting, handicap access, additions, modernizing kitchens and baths and even landscaping. The loan is assumable and is set up to encourage investors to "flip" (sell) the properties to an owner-occupant. Even if the property is in perfect condition, the loan can be used to finish a basement or to add energy savings improvements.

W F Snyder Company has  up-to-date VA and FHA foreclosure lists as well as access to all the Fannie Mae and other bank foreclosures. We can also help you with those "super-motivated" sellers.

To receive more specific information, please send e-mail to Investor@wfsnyder.com

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