How to buy occupied properties

When buying occupied foreclosures there's one simple rule, prepare for the worst but hope for the best. There I a ton of money making opportunity that comes with purchasing occupied rentals BUT you have to know what your doing.

It's important to recognize there's a lot you don't know if you can't see inside a property or speak to the current occupant. Will the people cooperate and leave? Can you pay to relocate them? Are they just going to make your life miserable and fight to the end? Nobody knows.

The answer is simple. Underwrite the deal as if it needs a full gut renovation and assume your normal holding time (6 months, 9 months, Etc). Then research the average timeframe for the eviction process in your area and physical costs (legal, movers, Marshall, etc). Subtract the hard costs associated with the eviction as well as the carrying costs for the additional hold time from your original maximum allowable offer and BAM. Your new maximum allowable offer.

Using this methodology insures that you have budgeted for the worse case for reno and hold times thereby minimizing your downside risk. Make sure your lenders are aware of the additional time needed so you can structure your financing accordingly.