What does foreclosure how to buy your first real estate investment and bank owned property have in common? For most people when they hear about foreclosure, they are not thinking about the investment potential. What strikes my mind is the monumental opportunity some lucky investor will have by taking the time to structure a deal that makes it possible for the bank to get the property off their books, and for you the investor to make a hearty profit.
How would you like the chance to buy a property way below market value, that is the leverage of buying bank owned property. Many times there is not a lot of repairs and very little wrong with the property. There are so many homes out there right now just waiting for someone to discover. The really good deals out there that can put you in the home of your dreams. Without the savings from foreclosure investing it may just be a pipe dream for you to buy a home of your own on your current budget.
Think about it for a minute, in what other scenario can you find ten, twenty and thirty percent discounts off market value for real estate. Lenders need to try and recover as much of the money they have tied up in the property as they can, they want their money out of the property not the property. Lenders do not want ownership of the property they want the money that comes from the property. Giving you the opportunity to find really great deals. You can even find some homes with a mortgage payment equal to your apartments rent.
When they receive the letter from the lender notifying them that foreclosure proceedings have been started unfortunately, this is when most home owners just throw-up their hands and ride their bad times into the ground. Your credit may not recover from foreclosure for ten to fifteen years. That means no charge cards, car loans and just try to get a lease on a nice apartment with bad credit.
The fear of foreclosure can have a paralyzing effect on people but if these property owners start thinking about what they can save from this difficult situation they would quickly realize their most important asset is their credit rating, without a good credit rating it can be a very long road to financial recovery, but by selling the property and getting out from under the debt, and saving their credit rating when their situation improves, they will have the credit to move forward in their lives.
That’s how a foreclosure investor can become a valuable friend in this situation by helping the property owner understand how they can sell the property ( and put some money in their pocket to pay off some bill’s) before the lender is forced to start foreclosure proceeding’s ruining their credit history and leaving them with nothing but debt.
With this kind of motivation, coupled with the principle of supply and demand, will result in foreclosed properties being abundant to investors well below their market value. The difference between what an investor sells a property for, minus acquisition cost and expense, is the investor’s profit. Investors can raise this profit in two ways. The first is to maximize what the price they sell the property for by making upgrades. Since foreclosed properties are taken from the previous owners, they are probably not in pristine shape, without some minor work before re-selling, as a conventionally marketed property.
You need to be thorough and competent, you must keep a written file of all your research before buying a property, and carefully review all the information and make sure you have covered all the bases. A good way to back yourself up would be to have professional people to work with you by building yourself a network with a reliable handy man, and a real estate agent with experience in purchasing bank owned property, while your gaining experience in foreclosure how to buy investment properties.