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Foreclosures are on everybody’s mind these days because it’s posted all over the news and radio. The current economy and real estate market are struggling which creates one of the best opportunities for creating wealth. You really can buy homes for $1,000 these days. It may need some work, but you will always make money on four walls and a plot of land at that price. Real estate investing has changed and over a few articles, I plan on giving you some great information.
Foreclosures have three phases: Pre-foreclosure, Auction and REOs. First, let’s look at Pre-foreclosures. In the pre-foreclosure phase the owner is still in control. They are properly a few months behind on payments and the clocking is ticking for them to make a move to get out from under the debit before the bank forecloses on the home. A foreclosure on your credit is very devastating and makes for a motivate seller. A fundamental in investing is learning why the home is in this phase.
You have to be able to identify a problem before you can have a solution. You also need to identify if there is equity in the home. If there’s not, you probably won’t be able to help as equity creates price flexibility for the seller and opportunity for you. This phase is great because the banks aren’t involved at this point and allows for you to do some research into the condition of the home and hopefully get a great deal without the seller having to have the foreclosure on there record.
Auction phase is when the bank has taken control of the property and is, well, auctioning the home off. Investing in this phase is difficult and usually reserved for the more experienced due to financing, inspections and the attached liens on the property. More experienced investors can do more detailed research and get a good handle on their risks without the inspections and have more experience dealing with additional lien holders. My guess is that if you are reading this, you are probably a beginner and should not try to buy a home in this phase.
REOs, ahhh this is it. REOs are the homes that went to auction but didn’t sell. These properties have gone back to the bank and the other incumbencies have been removed. This is where you hear of people buying homes for $500 – $2,500. This is the banks last resort as they couldn’t get the home off their books at auction. At this stage, you can inspect the property and know what you are getting into. These homes will probably be in disrepair but with a little TLC you can make a huge profit quickly.
That’s it for now, but be on the look out because I will be showing you how to find these properties and explaining exist strategies for these investments. I planning on showing you that you really can make a fortune in real estate.
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