Utah s real estate market has slowed considerably and foreclosures are starting to rise. According to RealtyTrac, foreclosures in Utah increased by 4.99% in January compared to the previous year. This was a 16.49% increase over December, 2007.
Compared with the rest of the nation, Utah is firmly in the middle, ranking #22. Historically, Utah has ranked very poorly in financial metrics including bankruptcies, foreclosures and mortgage fraud. 200 homes began the foreclosure process in Utah last month and nearly a 1000 are bank owned or REO.
Besides new homes, foreclosures can present some opportunities for real estate investors, but they also present pitfalls. I was looking at an REO the other day in Sugarhouse. It was obviously a failed flip as this two unit home had the
upstairs in working order, but the main floor had been stripped. The condition of the home makes it unlikely to obtain bank financing. Only a private lender or someone with cash could buy it.
About five years ago I was very into looking at foreclosed properties and HUD homes. I saw quite a few of them, but very few would fail bank financing because of property condition. What I m seeing on the MLS now suggests foreclosed homes in Utah are in much worse condition due to eager rehabbers failing to complete their work. Some even had the windows and doors boarded up, a condition that was rare in Salt Lake.
There is money to be made in foreclosed real estate investing, but you have to be very careful when doing it. As foreclosures in Utah continue to rise there will be plenty of opportunities for real estate investors.