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Home > Bank Foreclosure > Foreclosures In 15 Minutes > Foreclosures - How To Determine Equity Foreclosures - How To Determine Equity The old adage about the only the three words in business being "Location, Location, Location" is as true as ever.
In real estate, however, those three words are "Equity, Equity, Equity." The difference between what is owed on a property and its market value is called equity.
As a real estate investor, the goal is to buy the foreclosure home for less than the full value and sell for market value in order to make a profit in the process.
The question is, at what point does caution balance against risk to make a profit on a foreclosure home? A strong equity position is generally targeted at 25% after repairs.
An equity position less than 25% can work for rental investments, but for resale purposes 25% is a safe figure.
In order to determine if 25% after repairs can be achieved there are only three variables that need to be weighed in the mind of an investor:
- How much can I get the foreclosure home for?
- How much can I sell the foreclosure home for?
- How much will it cost to repair the foreclosure home?
It is not difficult to obtain answers to these questions as long as the readily available data can be obtained quickly and accurately distilled into usable information.
By using the following guide and examining each foreclosure home in terms of these three variables it should not take more than fifteen minutes to determine if a particular foreclosure home is a wise investment. Next :: Foreclosures - How Much Can I Get The Foreclosure Home For?
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