Prices on land and homes have risen in the last several years making it a little more difficult to find affordable housing for the average person. Because of this, many first time homeowners as well as real estate investors sometimes turn to the foreclosure market.
Although there are some real estate markets that have not been hit with an unusual amount of foreclosures compared to other parts of the nation, but there are still an abundance of opportunities to find that steal of a deal.
Everyone should realize that investing in real estate or foreclosures is not “amateur night.” It can be risky. You must do a tremendous amount of homework and know what you are doing. It’s usually best to have a qualified real estate broker or real estate attorney represent you in this endeavor.
You Can Minimize Your Risks In The Real Estate Market
If you want to buy foreclosure properties, you must know how to find the potential property and access its value. You must know how to carefully research and inspect the property, so you don’t get stuck holding a money pit – or ever worse, a totally worthless piece of paper. You must also learn how to deal with home owners, how to bid on property and how to buy well below the market value so that you can sell for maximum profit.
There also are at times that you may need a private money lender to help fund real estate deals. Not having a private money lender at the beginning of your real estate investing career may come to haunt you in the future.
Do your homework and learn how to:
- Research property titles, mortgages and deeds
- Obtain financing
- Avoid the most common pitfalls
- Learn how to attract private money.
Attracting private money lenders will set you on the path to raising money for your real estate investment business and creating sustainable wealth.
If you are planning on investing in foreclosures, learn how to see the good and bad candidates for buying foreclosures.
Investing in foreclosures are not right for anyone who is currently having financial problems and is hoping a foreclosure will bail them out. This is not easy money regardless of what the late night infomercials may say.
Foreclosures in the real estate market can be very right for a person who has a ton of cash, a steady job, a reliable cash flow or a financial backer. A backer can be anyone from a business partner to your grandmother. If this is something you really want to do, you can always find sources for investment capitol.
What kinds of things do you look for as a real estate foreclosure investor?
Lots of things, from top to bottom and inside and out. Look at cracks in concrete, windows, roof, and doors – look at everything. Foreclosures aren’t always in top-notch condition. The owners may not have been able to afford to keep up maintenance. If you can’t hire a professional home inspector, do what you can by inspecting the property yourself from all angles outside.
Things to avoid when investing in foreclosures.
Buying from long distance, in a distressed neighborhood, preconstruction projects and avoid buying from anyone that promises you cash back at closing. This is totally illegal.
Types of Foreclosures in real estate.
Many aggressive investors go after foreclosures when there is a downturn in the housing market. Foreclosures are homes that people have lost because they didn’t pay their mortgage payments or property taxes.
Pre-foreclosure: The owner has missed three or more payments and the lending bank has started foreclosure proceedings.
Foreclosure Auction: The home is released to the mortgage company and they can arrange an auction.
Real Estate owned properties (REOs): Real Estate Owned by the lender, this status indicates the lender or bank now owns the property as a result of a foreclosure .
Each of these types of foreclosures offers its own particular unique opportunity for the investor. In real estate, the homeowner can still list the property as a “short sale.” This is where the bank will consider offers that will not pay off the mortgage in full. The bank will forgive the difference owed because it will be less of a loss than if the bank had to go through all of the steps of foreclosure — foreclose on the property, prepare it for a sale and then resell it at a later date.
Most real estate investors know they can often buy these homes for 15-20% less than market value. If the property goes through full foreclosure, the bank will either place it up for auction or list it with a good real estate agent. If the property goes to auction on the courthouse steps, bidding is usually extremely competitive, but it is here that investors often have the opportunity to make the largest profit.
The earlier you buy in the process, the better the opportunity of making a good profit. You must know the current value of the property, the elements of time and market cycles. If you have to make repairs, you must know how to figure your rate of return and in what time frame. If you have the necessary skills and qualities it takes for investing in real estate and foreclosures, it can indeed be a very profitable real estate investment career.
Do you want to read a book on real estate that is based on real world practical application and not just theory? “Attracting Private Money Lenders: And 17 Vital Keys To Creating Wealth While Building A Profitable Real Estate Investment Business” discusses all the topics applicable to your real estate investment business and ties it all together by showing you how understanding each topic can help you to attract more private money lenders and grow your business.