Are Government and Financial Institutions Abandoning Areas With High Foreclosure Rates?

Why are banks and government agencies bailing on America’s hardest hit neighborhoods and what does it mean for real estate investing? Can real estate investors take advantage of these areas with high foreclosure rates?

From the way the media has been painting the situation, many Americans might believe that foreclosures are virtually extinct. They may have been dropping close to near 2007 levels in some small pockets of the nation, but other cities are still seeing high double digit increases in new foreclosures and foreclosure sales.

This, on top of homeowners ‘strategically defaulting’ on their home loans, has created areas extremely dense with vacant homes and foreclosures. Real estate investing pros are making a big dent and are flipping many of these homes, but that doesn’t always mean they are immediately occupied by the end buyers.

News reports recently revealed major banks were picking up and exiting some of the hardest hit areas and building brand new homes in more affluent locations. Now, CNN Money reports that the government seems to be doing the same thing.

According to CNN Money and the U.S. Department of Housing and Urban Development (HUD), as many as 20% of federal housing offices will be shut down, many of which are in the hardest hit areas.

Some of the worst hit neighborhoods in cities like Detroit and Las Vegas have also seen public services restricted or even cut off.

So what does this mean for real estate investing pros? Some wholesalers and flippers are still finding huge profits in flipping these houses fast for cash. Others are successfully renting select properties. However, more significantly, home builders are finding a sweet spot in bulldozing these homes in mass and creating new communities.

This doesn’t have to be restricted to builders or those with huge pockets either. With a little creativity, everyone can still make a good living, even in these areas. Consider acquiring large parcels, putting together plans for communities and collaborating with smaller builders.  Doing so may serve to revitalize the entire community.

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