The Senate overwhelmingly passed the new Foreclosure Act. The bill still needs to pass the House and be signed by the President. But, there are some very interesting tidbits inside the bill that bear a second look.
First, and my favorite, is a $7K tax credit (credit not deduction) for anyone who buys a house in the foreclosure process.
It’s hard to say if this will be the final bill, but at this point it looks like you can get the tax credit if you buy a pre-foreclosure property. You’ll need to hold the property for two years in order to qualify for the full credit. The Senate definitely wants to stop the fix n’ flip mentality, since that contributed to the current real estate instability (at least in their opinion).
One of the strategies that immediately comes to mind are (1) buying in preforeclosure with the most creative real estate strategy you can legally undertake, as long as you BUY the property, don’t just lease it and (2) find a tenant/buyer with a rent to own program that requires the tenant/buyer to wait at least 2 years before they can exercise.
The fact is all these people who are losing their homes will need a place to live. The sale/leaseback is under fire, so it could work well to have multiple pre-foreclosures available so you can switch up the tenant/buyers into different homes.
The other part of the bill that is very interesting to me is that the government is planning to pump money into the neighborhoods hit hardest by foreclosed and abandoned homes.
This all bears watching!