Foreclosure Houses as Investments

Guest Blogger — Wed, 03 Mar 2010 11:23:59 +0000

The current increase in the number of foreclosure houses offers many opportunities for investors to make a profit. These properties could be purchased at very low prices because the banks and lenders are usually anxious to sell them and convert them into liquid cash that they can use in their business of lending money. What is important here is to find these types of houses before other people locate them because the selling price is likely to increase if there are more people who want to buy a particular property. These could be found through the Internet, lis pendens lists, word of mouth, real estate agents, friends, seminars, newspapers, direct mail, and banks.

When you have located one of these foreclosure houses while it is still under pre-foreclosure, you may need to contact the homeowner. While remembering that the homeowner may be under a lot of stress, you will need to find a way to ask his permission to have the home thoroughly inspected by a licensed house inspector. This is an essential step because in the event that the home has some damage, you may need to spend a large amount of money to repair it. If this repair cost is not taken into account in your estimates, you may be selling the property at a loss instead of gaining a profit. However, if your calculations show that you still stand to make a profit after making the repairs, you will then proceed to negotiating with the lender and the borrower to close the deal.

Another way to look for foreclosure homes is through the auction notices, after which you will need to visit an auction that is taking place for you to get used to the process and to provide yourself with an idea about the down payment and deposit that are required. Next, you will need to research those homes that have the potential for substantial profit. After this, you will need to make an estimate of the various expenses that are required and then calculate the highest bid that you could make for the property. Remember to bring along your deposit to the auction and to be ready with the source of your funding for the down payment before going to the auction.

Another way to locate forecloser houses is by looking at the Real Estate Owned (REO) lists of banks and other lenders. These are the properties that were not sold during the auction and the lender is usually anxious to sell them to transform them into cash that they can use in their business of offering loans. Here, it may take some patience but it is possible to negotiate for a much reduced selling price. For information on how on funding a foreclosure purchase check out http://hardmoneylendersonline.com

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Foreclosure Houses as Investments