Get Started With Real Estate Foreclosure Investing
While many people begin worrying about how many foreclosed houses are appearing on the market during times of recession, smart investors know that these are often the best times to make some serious profits.
What Exactly are Foreclosures?
Banks begin foreclosure proceedings when a home owner falls behind on mortgage payments. When those payments are so far in arrears, the bank begins to take steps to recover the money is it owed by those home owners. If there is no possible way for the home owner to raise enough cash to cover the outstanding debts, then the bank has no other choice but to sell the house used as collateral security.
Why Invest in Foreclosed Properties?
When a bank is beginning foreclosure proceedings, they simply don't care how much the house is really valued at on the real estate market. They only want to recover the money they lent out to the home owner. This can mean that smart investors have an opportunity to purchase properties at prices far below their real market values.
There are three possible opportunities to buy foreclosed property. What you choose actually depends on who you want to deal with. Each one has its own advantages and disadvantages.
Pre-Foreclosure
The first opportunity is buying property during pre-foreclosure. Pre-foreclosed properties are properties that have not yet left the hands of the owner. Once you buy this property, you also inherit the debt associated with the property. Oftentimes this is where you can buy the property at its cheapest. Just be sure that you include the debt in your price computations. Also, be wary of situations where the owner is not fully honest with the debts associated with the property. There can be multiple lenders to the associated debt.
Purchase Through Court Auctions
The second opportunity during a court auction after the property is foreclosed. The disadvantage is pretty obvious. During an auction, depending on the potential value of the property, the price can skyrocket. The advantage is that the property is now free from all debts.
When Property Has Been Acquired By The Lender
The third option is buying after the lender has acquired the property and taken full ownership. Banks aren't in business to buy property. They make their profits by charging interest on money they lend out to people, so its in their interests to sell any property they've acquired. In many cases, they'll happily negotiate with you on the purchase price of the property. This can be one of the simplest ways to purchase real estate at a reasonable price.
Whichever option you choose, it's always vital that you inspect the property thoroughly and investigate the true extent of any debts outstanding against the home.
Once you're sure the numbers stack up the right way, you could easily be purchasing an investment property that is valued so much higher than the price you paid for it. Wise investors also understand that by keeping purchase costs low, they also have the opportunity to build an ongoing source of income as the rent can often exceed the costs associated with owning and maintaining the investment property.
Always be sure to spend some time researching into any potential foreclosed home you're considering buying and you'll soon find that there are opportunities to make great profits very quickly. - 23212
What Exactly are Foreclosures?
Banks begin foreclosure proceedings when a home owner falls behind on mortgage payments. When those payments are so far in arrears, the bank begins to take steps to recover the money is it owed by those home owners. If there is no possible way for the home owner to raise enough cash to cover the outstanding debts, then the bank has no other choice but to sell the house used as collateral security.
Why Invest in Foreclosed Properties?
When a bank is beginning foreclosure proceedings, they simply don't care how much the house is really valued at on the real estate market. They only want to recover the money they lent out to the home owner. This can mean that smart investors have an opportunity to purchase properties at prices far below their real market values.
There are three possible opportunities to buy foreclosed property. What you choose actually depends on who you want to deal with. Each one has its own advantages and disadvantages.
Pre-Foreclosure
The first opportunity is buying property during pre-foreclosure. Pre-foreclosed properties are properties that have not yet left the hands of the owner. Once you buy this property, you also inherit the debt associated with the property. Oftentimes this is where you can buy the property at its cheapest. Just be sure that you include the debt in your price computations. Also, be wary of situations where the owner is not fully honest with the debts associated with the property. There can be multiple lenders to the associated debt.
Purchase Through Court Auctions
The second opportunity during a court auction after the property is foreclosed. The disadvantage is pretty obvious. During an auction, depending on the potential value of the property, the price can skyrocket. The advantage is that the property is now free from all debts.
When Property Has Been Acquired By The Lender
The third option is buying after the lender has acquired the property and taken full ownership. Banks aren't in business to buy property. They make their profits by charging interest on money they lend out to people, so its in their interests to sell any property they've acquired. In many cases, they'll happily negotiate with you on the purchase price of the property. This can be one of the simplest ways to purchase real estate at a reasonable price.
Whichever option you choose, it's always vital that you inspect the property thoroughly and investigate the true extent of any debts outstanding against the home.
Once you're sure the numbers stack up the right way, you could easily be purchasing an investment property that is valued so much higher than the price you paid for it. Wise investors also understand that by keeping purchase costs low, they also have the opportunity to build an ongoing source of income as the rent can often exceed the costs associated with owning and maintaining the investment property.
Always be sure to spend some time researching into any potential foreclosed home you're considering buying and you'll soon find that there are opportunities to make great profits very quickly. - 23212
About the Author:
Not the right time to start with wholesale real estate investing? Gary Z. Bryant says your wrong. Learn more about Real Estate Investing and Real Estate Foreclosure Investing
posted by X - Men @ 4:10 AM
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