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 Buy Foreclosed Homes?
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 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.
Buying Property During Pre-Foreclosure Process.
The first opportunity is buying property during pre-foreclosure. Pre-foreclosed properties are properties that have not yet left the hands of the owner. Once you buy this property, you also inherit the debt associated with the property. Oftentimes this is where you can buy the property at its cheapest. Just be sure that you include the debt in your price computations. Also, be wary of situations where the owner is not fully honest with the debts associated with the property. There can be multiple lenders to the associated debt.
Court Actions
The second opportunity during a court auction after the property is foreclosed. The disadvantage is pretty obvious. During an auction, depending on the potential value of the property, the price can skyrocket. The advantage is that the property is now free from all debts.
When Property Has Been Acquired By The Lender
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.
Whatever option y ou choose, you should always inspect the property and the associated property and loan documents yourself. This is especially true when you are dealing with the original property owner directly.
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.
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. - 23210
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 Buy Foreclosed Homes?
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 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.
Buying Property During Pre-Foreclosure Process.
The first opportunity is buying property during pre-foreclosure. Pre-foreclosed properties are properties that have not yet left the hands of the owner. Once you buy this property, you also inherit the debt associated with the property. Oftentimes this is where you can buy the property at its cheapest. Just be sure that you include the debt in your price computations. Also, be wary of situations where the owner is not fully honest with the debts associated with the property. There can be multiple lenders to the associated debt.
Court Actions
The second opportunity during a court auction after the property is foreclosed. The disadvantage is pretty obvious. During an auction, depending on the potential value of the property, the price can skyrocket. The advantage is that the property is now free from all debts.
When Property Has Been Acquired By The Lender
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.
Whatever option y ou choose, you should always inspect the property and the associated property and loan documents yourself. This is especially true when you are dealing with the original property owner directly.
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.
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. - 23210
About the Author:
Scared to start with wholesale real estate investing? Gary Z. Bryant says your wrong. Find more about Real Estate Investing and Real Estate Foreclosure Investing In Las Vegas
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