Foreclosures; a profitable investment

The Foreclosure market provides an excellent opportunity for investment in the real estate. Currently these foreclosure houses are available at lower cost than their actual market value. You can find a home at about 50% below cost than its real market value depending on your area. In order to find these properties and get good deals, one should do the following:

• Educate yourself (see our Bio for how to start)

• Become familiar with the market in your area of interest

• Find out where the house auctions take place and time/dates

• Check the newspapers

• Check websites (http://www.foreclosureradar.com/)

• Market yourself letting people know that you deal with foreclosures

• Considering a piece of property include its physical condition

• The property’s documents and the stage of foreclosure process it is in

A Home owner starts to face foreclosure process after they fail to make the mortgage payment. They generally are allowed to make some late payments, but are charged late fees. Once the home owner stops making the payment for whatever reason, the mortgage company starts trying to contact the owner. The homeowner is given time to rectify the situation, by catching up with payments. If the owner fails to catch up with payments the foreclosure process starts with the bank, money lender, or the private institution from which the home owner had borrowed money. This institution seizes the property and puts it for sale at a public auction. Selling and buying foreclosed homes can prove to be beneficial for both the sellers and the buyers if the deal is done in the right time. The sellers get the money they needed which also helps save their credit report and buyers get a house at a much lower cost than its actual market value.

Understand that the lenders do not want to foreclose on properties because these foreclosed homes mean an extra work and headache for them. These institutions are in the business of making money, not holding on to property. They usually avoid foreclosing a property and even if they had to, they want to get rid of the property as soon as possible. Too much property in their books can cause less lending in some situations. They only want to get back their money and do not intend to make huge profits out of the property, that’s why foreclosure houses are available at much lower rates, because the profit of the sellers is not involved in their selling price.

In the current market these banks are still holding on to huge portfolios of houses that they have not released yet to the market. The reason for this is because there are so many homes that have foreclosed that it would hurt home prices even more if the banks were to release all the foreclosed homes into the market. There are many opportunities still to be had with current foreclosures and REO’s. The one thing you have to do is get educated on how to capitalize on the current situation.

Foreclosure houses are a great acquisition strategy. It can offer numerous ways to make money. You can rent the property out and create positive cashflow. You can wholesale the property for a quick gain. You can also fix and flip the property for nice chunk of profit.

A special note about auctions:

True foreclosure auctions are never held during the weekends. You may find third party companies that banks hire to hold auctions on weekends and advertise that they are selling foreclosures, REO’s, and other homes in distress. Be forewarned that this is not a true foreclosure auction and you might pay more than you would have by attending a true foreclosure auction. Foreclosure auctions are most always held near or at the county courthouse steps. They happen Monday thru Friday and are held during normal business hours. They are usually referred to as a "Trustee sale." This information will help you on your path to foreclosure investing.