You can still make money if your market is flooded with foreclosures.
The trick is to find the unique and desirable homes. Otherwise, you are competing with every other house on the market. We say that you are dealing in fungible goods, everything is pretty much the same as everything else. The only way you can compete effectively in fungible goods is to slash your price. As an investor, you always want to avoid that situation.
That being said, there is one other way to maintain profits when buying and selling fungible goods. That is the Chiquita Banana approach. Chiquita puts a little sticker on all their bananas, so you know they are special. They are Chiquita-brand bananas. They look and taste like all other bananas, but that sticker adds value and commands a higher price.
If you can do something similar with foreclosure homes, you can enjoy the same results. Perhaps you can brand your homes as “Joe Jones Certified Homes.”
You advertise, “I’m Joe Jones and I stand behind every home I sell. If there is a problem after the sale, I live right here in the community. You can find me. I’m not like all those foreclosing lenders who just want to unload inventory. Buy from me, Joe Jones, your neighbor.”