The Real Deal Miami

Investor gives tips about buying foreclosed homes

May 26, 2009 02:49PM

The Wall Street Journal talked to Mark Allen of Gorilla Capital, which buys and sells foreclosed homes, about how to buy foreclosure properties as an investment. Allen said that even though a neighborhood “looks run down and you might not want to live there personally,” the home still has potential to sell to someone who can afford it. Allen said to avoid neighborhoods with multiple foreclosures, be aware of back taxes that need to be paid and only buy the first mortgage of a home. If an investor wants to rent out a home instead of sell it, Allen said to plan to charge rent that totals 1 percent of the purchase price, and expect to spend about $15,000 to $20,000 on renovations, but avoid homes that need major work.