Real Estate Foreclosure Investing and How To Get Started
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.
Why Do Foreclosures Happen?
Foreclosures occur when the home owner has fallen so far behind on mortgage payments that it leaves the bank or lender with no other alternative than to try and sell the house to recoup some of their own money. While most banks are reluctant to begin foreclosure proceedings, if the home owner is making no attempt to catch up those delinquent payments then the lender will notify of their intention to begin foreclosure proceedings.
Why Buy Foreclosed Homes?
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 options if you're considering buying foreclosed property. Each opportunity comes with distinct advantages and disadvantages.
Finding Foreclosed Properties
The first option is to try and buy property during pre-foreclosure. Pre-foreclosed properties are homes that are still owned by the home owner. This means the bank hasn't taken possession as yet. The current owners are very motivated to sell the house to get themselves out of trouble, so you could easily pick up a great bargain.
Purchase Through Court Auctions
The second option is to try and buy property during the court auction after the property has already been foreclosed. The primary disadvantage to buying during auction is that there may be other investors bidding as well, which could drive the price much higher than you intended to pay.
Purchase After Acquisition
The third option you have for buying homes in foreclosure is to wait until the property has been fully acquired by the bank. As bank's have no interest in investing in real estate, they'll happily negotiate a fair price with you that covers their costs. This can sometimes mean finding a bargain priced investment property that cost much less than the real market value.
Whichever option you decide to follow, you should always take care to inspect the property thoroughly. Research as much as you possibly can about any outstanding debts secured by the property. Double-check if there are any outstanding back-taxes owing on the house.
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.
Despite their low prices, the potential profits from these properties and still debatable especially during these times. As in other real estate ventures, caution is always advised. - 23208
Why Do Foreclosures Happen?
Foreclosures occur when the home owner has fallen so far behind on mortgage payments that it leaves the bank or lender with no other alternative than to try and sell the house to recoup some of their own money. While most banks are reluctant to begin foreclosure proceedings, if the home owner is making no attempt to catch up those delinquent payments then the lender will notify of their intention to begin foreclosure proceedings.
Why Buy Foreclosed Homes?
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 options if you're considering buying foreclosed property. Each opportunity comes with distinct advantages and disadvantages.
Finding Foreclosed Properties
The first option is to try and buy property during pre-foreclosure. Pre-foreclosed properties are homes that are still owned by the home owner. This means the bank hasn't taken possession as yet. The current owners are very motivated to sell the house to get themselves out of trouble, so you could easily pick up a great bargain.
Purchase Through Court Auctions
The second option is to try and buy property during the court auction after the property has already been foreclosed. The primary disadvantage to buying during auction is that there may be other investors bidding as well, which could drive the price much higher than you intended to pay.
Purchase After Acquisition
The third option you have for buying homes in foreclosure is to wait until the property has been fully acquired by the bank. As bank's have no interest in investing in real estate, they'll happily negotiate a fair price with you that covers their costs. This can sometimes mean finding a bargain priced investment property that cost much less than the real market value.
Whichever option you decide to follow, you should always take care to inspect the property thoroughly. Research as much as you possibly can about any outstanding debts secured by the property. Double-check if there are any outstanding back-taxes owing on the house.
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.
Despite their low prices, the potential profits from these properties and still debatable especially during these times. As in other real estate ventures, caution is always advised. - 23208
About the Author:
Scared to invest in real estate? Gary Z. Bryant says your wrong. Learn more about Real Estate Investing and Real Estate Foreclosure Investing
posted by X - Men @ 1:50 AM
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