Real Estate Foreclosure Investing and How To Get Started
With the credit crunch still creating waves upon the world economy, foreclosed properties are a common sight. Even though foreclosures tend to strike a depressing image, investors may find themselves in jovial celebration.
What Are Foreclosures?
Foreclosures happen when the owner cannot pay his or her debt to a lender such as a bank. During a mortgage agreement between owner and the lender, the property was used as collateral for a loan. The foreclosure follows the contents of the mortgage contract wherein the mortgagor has to surrender ownership to the mortgage upon failure to comply with the terms of payment.
Why Buy 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.
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 option is buying during the court auctions after the property has been foreclosed upon. The disadvantage to an investor in this situation is that if there are several bidders at the auction, this could drive the price higher than you were willing to pay.
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 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.
In some circles, real estate foreclosure investing is considered one of the most lucrative investments given the low price (sometimes even less than wholesale). This claim is supported further by the current global crisis and its effects on property values. In some parts of the United States, property values can go as low as a few hundred dollars. Many foreign investors have already taken notice of these properties and are going into a buying frenzy.
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. - 23223
What Are Foreclosures?
Foreclosures happen when the owner cannot pay his or her debt to a lender such as a bank. During a mortgage agreement between owner and the lender, the property was used as collateral for a loan. The foreclosure follows the contents of the mortgage contract wherein the mortgagor has to surrender ownership to the mortgage upon failure to comply with the terms of payment.
Why Buy 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.
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 option is buying during the court auctions after the property has been foreclosed upon. The disadvantage to an investor in this situation is that if there are several bidders at the auction, this could drive the price higher than you were willing to pay.
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 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.
In some circles, real estate foreclosure investing is considered one of the most lucrative investments given the low price (sometimes even less than wholesale). This claim is supported further by the current global crisis and its effects on property values. In some parts of the United States, property values can go as low as a few hundred dollars. Many foreign investors have already taken notice of these properties and are going into a buying frenzy.
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. - 23223
About the Author:
Scared to start with wholesale real estate investing? This is wrong. Ask Gary Z. Bryant. Learn more about Real Estate Investing and Real Estate Foreclosure Investing
posted by X - Men @ 4:07 AM
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