When To Invest In A Foreclosure | Part One

When To Invest In A ForeclosureThere are three phases of a foreclosure: pre-foreclosure/short sale, auction, and REO (real estate owned). Each phase can be seen in real estate comps for any given area. Today I want to talk with you about the phases of a foreclosure and when, during the process, is the best time to make your foreclosure investment.

Pre-foreclosure is the first phase. This means that payments are behind at least 90 days. During this first 90 days, only the homeowner and lender know about the proceedings. After 90 days, a notice of default or Lis Pendens is recorded at the county recorder’s office or register of deeds office. Now is a good time to purchase the property. The property is still in the owner’s hands and they may be willing to work with you. First, you need to find them, contact them, ask questions, and do your homework. If the deal is profitable, then offer assistance.

The homeowner still is in control. If there is equity in the property, work with the owner to take an equity position. If there is no equity, work with the lender. Always try to negotiate with the lender to buy the property for less than what is owed (short sale). This can help the homeowner avoid foreclosure and possibly help them avoid any more damage done to their credit. Bank gets rid of a bad loan and you make a profit on the resale. Win-win for everyone.  This is a perfect scenario.

My next post will continue to cover the phases of foreclosure.  It is important that you know what you are dealing with.  Learning the pros and cons of each could save you a considerable amount of money in the long run.

Finding Success in Real Estate Investing | Part Three

Finding Success in Real Estate Investing | Part Two

The past few days we have discussed the real estate market and how to leave your mark on it.

Remember guys, staying focused is critical. Which area interests you the most – and why? Which type matches your personality, abilities and skills? Your choice should “fit” you and, most important, it must have the potential of helping you reach your financial goals.

If you are a do-it-yourself person with a creative flair and would enjoy being involved in the day-to-day oversight of properties, single family fixer-uppers would be a good possibility. On the other hand, if you have no interest in managing the properties, apartment buildings make more sense because apartment buildings generally have on-site managers that take care of everything.

Once you have decided which type of real estate will be your focus, study that market carefully – in great detail – before making an offer. Gather as much pertinent information as possible, for example, fair market value of the property, recent sales in the area for similar properties (real estate comps), the maximum offer you are prepared to make, and have a valid estimate of expected rental income and immediate costs (renovations, repairs, etc.).

Be prepared for anything that may come up in the bargaining sessions. Make sure you are working with an experienced agent that you can trust. It is always best if the agent has been referred to you by an experienced investor. You may also want to discuss any potential purchase with other trusted advisors such as your financial planner, your attorney and your accountant.

It should go without saying that the goal of a successful real estate investor is always to get the best property for the best price. Once you learn the system, and you have closed escrow on your first property, you will be on your way.

Finding Success in Real Estate Investing | Part Two

Finding Success in Real Estate Investing | Part ThreeLet’s keep our talks going about real estate investing.  You basically want to start at the beginning – delve into the fundamentals. Talk to an expert in the field and find out what it is you “don’t know.” From that discussion develop a list of questions that you need to have answered and go to work finding the answers. With all the information sources we have available today, the answers are out there, you may have to dig for them, but they are there.

Talk to everyone you know who has done well with this type of investing, pick their brains. Get them to share their experiences and mistakes they made if they are willing. Ask about books they recommend. A mentor is an invaluable source for guidance in the first months of real estate investing.

Do not read just one book or watch one set of videos. To be truly educated in any field, you must study different perspectives on each topic and look for critical threads that run through all the material regardless of who the author is. Your understanding will begin to develop and you will slowly develop a solid knowledge base that will help you be successful.

Begin to network with others in the real estate world, agents, brokers and investors. In fact, joining a real estate investment club or taking classes on real estate investments could be fun and extremely useful in furthering your education.

I am sure that it is obvious, but I am going to say it anyway. Investing in anything requires capital. You must either have personal capital to invest, financial partners that will help provide the capital (and hopefully have some experience in real estate investments), or you must have the assets and a credit history that will allow you to finance your purchases. They all work, but the bottom line is that you must have the money to make money.

Join me next time for the last tips to find success in the real estate arena.  Learning and doing are the best way to make your mark in the real estate field.

Finding Success in Real Estate Investing | Part One

Finding Success in Real Estate InvestingInvesting in real estate has been one of the building blocks for building wealth for years. It has the potential to make the average man very rich, if he knows what he is doing. Solid real estate comps give you the tools you need to make your profit on each deal.

Any business that promises great profits also includes the possibility of great loss. Most losses are the result of mistakes that could have been avoided. Let’s bypass those mistakes and take a look at some steps that can help you be successful.

Education is the answer: DO NOT dive into real estate investments because the market is glutted with properties that are actually affordable and interest rates are low – or because you suddenly have a sizable chunk of income that you want to invest.

All of the reasons listed are good reasons for becoming a real estate investor, but do so with your eyes wide open. Learn the system and learn how it can work for you – real estate comps are just the beginning.

Foreclosure Investment Benefits | Part Two

Foreclosure Investment Benefits How does one buy a property through foreclosures?  I have discussed many times that using real estate comps to your advantage will help you make a wise offer.  The list below will help investors interested in purchasing a foreclosed property be successful:

Know your objectives – Before you start looking for properties identify your pricing goals. You should have already done research on location and have capital or be pre-approved.

Understand the buying process – Research through various bank and real estate websites in order to get a thorough understanding of the buying process of foreclosures.

Research the latest listings – Look through newspaper classifieds, the county records office, and the HUD website and perhaps subscribe to a local listing service to get the latest information on suitable properties.

Evaluate prices – Choose a few properties that closely match your requirements and evaluate their features and prices by making a thorough comparison and identify the most suitable deal. Searching real estate comps will assist you in knowing what is a fair price and what is over priced for that market.

Survey – Once you have decided on a property get it inspected to ensure that it is in a good condition and free of liens.

Negotiation – Reach out to the sellers and bargain for a lower asking price and negotiate on the down payment and try to reduce closing costs.

The lower asking prices and good investment potential of foreclosures makes them a very lucrative venture as a whole. Get a great bargain deal through foreclosed homes.