Posts Tagged ‘real estate wholesale investing’
by Gary Z. Bryant
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?
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 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 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.
What is a Court Auction?
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.
Purchase Directly From Lenders
The last opportunity is when the property has been fully acquired by the lender. Lenders are usually banks and are not involved in the business of real estate. This can be the most hassle-free way to acquire foreclosed property. Usually banks agree to negotiate the price of the property. This is the opportunity to get a good deal without the burdens of other options.
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.
A wise investor will realize the potential value of buying a foreclosed home at a discounted price to its real market value, especially in light of the recent reduction in real estate values. This can represent a double-benefit to a clever investors portfolio. Not only are you gaining extra equity in the form of higher market value than the original cost, but its also possible to keep your purchase costs low enough so that any rental income derived from the property will easily cover all the associated costs of the mortgage and operating costs of maintaining an investment property.
About the Author:
Scared to invest in real estate? This is wrong. Ask Gary Z. Bryant. Learn more about Real Estate Investing and Real Estate Foreclosure Investing
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The Pre-Foreclosure Property Investor's Kit: How to Make Money Buying Distressed Real Estate -- Before the Public Auction List Price: $24.95 Sale Price: $9.32  |
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Pre-foreclosure real estate is one of the hottest investment opportunities on the market. The Pre-Foreclosure Property Investor?s Kit offers step-by-step instruction and no-nonsense advice on how to find great deals, estimate fair market value, negotiate with sellers, sell your property on your own, and win big in real estate... |