You can pay current tenants to leave or give them time to move.
Buying a home at a foreclosure auction can seem like a good deal, a nightmare, or both, especially when there are still tenants living there. If you’re considering investing in a property like this, I know you’re wondering what to expect and what you need to do after buying. That’s why today, I will guide you through everything you need to do after buying a foreclosed and occupied property to help you turn it into a valuable asset. Here’s what you need to know:
1. Risks of buying a foreclosed property. Any investment comes with risks, so there’s no need to worry—all you need to do is be aware of what to expect, possible challenges, and how to mitigate them. Foreclosed properties are sold as-is, without inspections or warranties, and you must pay cash for the property the next day. You’re bidding against other investors, each hoping to score a great deal, but here’s the catch: none of you will know what condition the home is in or what issues you might encounter. This means that you need to be financially prepared for the best—or worst issues you’ll need to fix.
2. Handle current tenants. Once you successfully win the bid, the next steps depend on the situation with the property. If the home is vacant, you can change the locks and start renovating immediately. However, if someone is still living there, you need to handle that first. You generally have three options: pay them to leave (often called “cash for keys”), give them time to move out, or go through the formal eviction process.
3. Deal with previous owners. If the previous owners are still residing in the property, I recommend approaching the situation with tact. For example, we handled a property where the former homeowners were still living in the property and had been in contact with their bank’s loan modification department to renegotiate their mortgage to postpone the foreclosure, but the bank still proceeded with the auction, catching the homeowners off guard. We worked out an agreement and allowed them to stay in the home for a small fee for a short period while they looked for a rental, giving them time to transition without the immediate stress of eviction.
4. Make a renovation plan. Once the house is vacant, you can start walking through the house to make a renovation plan. In this case, the house was in reasonably good shape but definitely outdated. Our plan included replacing the cabinets, flooring, and updating the master bathroom, fixtures, and other details to modernize the home. Projects like these are not just about turning a profit; they also help raise property values for the entire neighborhood.
Working on these types of projects is something I truly enjoy. If you ever come across a dated home that could use a little love, let me know. I’d be happy to help turn it back into something special. And, if you’re interested in learning more about real estate investment opportunities or need advice on buying a foreclosure property, reach out to me anytime by calling 480-845-0048. I look forward to talking with you!
