Profiting from Real Estate Foreclosure Investing 3 Ways to Profit from 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 lender begins foreclosure proceedings, they aim at recovering the amount of money that is outstanding against the property. This can often mean the property is being sold for a much lower price than the real value of the property. Wise investors could find themselves purchasing properties at only a fraction of their true value with just a little research. Buying an investment property below true market price can mean an instant increase in the amount of available equity you have.
There are three options if you're considering buying foreclosed property. Each opportunity comes with distinct advantages and disadvantages.
Buying Property During Pre-Foreclosure Process.
The first option is finding property for sale during pre-foreclosure. Pre-foreclosed properties haven't had the ownership taken over by the bank yet. The owner still retains ownership. When you buy a home in pre-foreclosure, you inherit the outstanding debt standing against that property. This is usually the point at which youll stand to get the property at its cheapest. Its important to verify the actual debts outstanding against the property as the owner may not have disclosed the full extent of outstanding debts, or whether there is more than one lender involved with the debts.
What is a Court Auction?
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 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 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.
If you're willing to spend a little time researching and verifying the property thoroughly and investigate the true extent of any debts outstanding against the home.
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. - 23218
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 lender begins foreclosure proceedings, they aim at recovering the amount of money that is outstanding against the property. This can often mean the property is being sold for a much lower price than the real value of the property. Wise investors could find themselves purchasing properties at only a fraction of their true value with just a little research. Buying an investment property below true market price can mean an instant increase in the amount of available equity you have.
There are three options if you're considering buying foreclosed property. Each opportunity comes with distinct advantages and disadvantages.
Buying Property During Pre-Foreclosure Process.
The first option is finding property for sale during pre-foreclosure. Pre-foreclosed properties haven't had the ownership taken over by the bank yet. The owner still retains ownership. When you buy a home in pre-foreclosure, you inherit the outstanding debt standing against that property. This is usually the point at which youll stand to get the property at its cheapest. Its important to verify the actual debts outstanding against the property as the owner may not have disclosed the full extent of outstanding debts, or whether there is more than one lender involved with the debts.
What is a Court Auction?
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 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 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.
If you're willing to spend a little time researching and verifying the property thoroughly and investigate the true extent of any debts outstanding against the home.
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. - 23218
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 @ 2:34 AM
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