Renovating Distressed Property

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Due to the collapse of sub-prime lending practices and “bad” loans that were automatically serviced by more reputable commercial banks, the United States housing market has suffered greatly. Our incumbent President Obama entered his term with Congress having already introduced the “bailout” as a partial solution to saving major United States corporations and consequently, industries. The housing market has experienced an astronomical amount of foreclosures during this economic downturn. Accordingly, distressed real estate purchases present options for homebuyers that they might not otherwise experience, had the market retained most appraised home values/pricing. A buyer with $150,000 cash has the option of purchasing a distressed property for well below the market value, which in this kind of market is much lower than 4 years ago, provided the foreclosure amount the “seller” owes is less than the market value. In other words, a buyer purchasing a distressed property would do well to bid a contract price over the defaulted mortgage loan amount to cover the bank-owner’s investment into the property. So, my first recommendation would be to find a suitable property with these kinds of purchase features: Distressed property value is greater than the foreclosed loan amount. Then, I would bid on the home to cover the defaulted bank loan amount to close the sale. Should the distressed property purchase be made with perspective buyers with good credit, I would acquire a loan from a long-standing reputable commercial bank. Preferably, a low-interest fixed rate loan product would be ideal. However, if a variable home loan was the only option, I’d seek one with a fixed interest rate for at least five years, and make sure there we... ... middle of paper ... ...ves, etc. 4 Use portion of $150,000 for acquiring additional “Green” funding/incentives or partnering with Green home improvement shows/networks. 5 Use remaining $150,000 and surplus funds to make the home green through energy efficiency, improving bathrooms and kitchen first (for room that add highest re-sale value), then heating, plumbing and electrical. This plan provides for maximum personal enjoyment, adding Green value which saves energy costs and accounts for environmental friendliness (social responsibility) while using materials that will last (less in upgrades and repairs over time of home ownership). If owner doesn’t occupy the home personally, I would recommend putting the Green home up for sale, offering long-term savings for any new buyer. However, if I worked this hard to go green, I’d be settled into a new formerly-distressed-turned Green home!

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