One of the strongest strategies that experienced real estate investors use to maximize their profits is to invest in foreclosures. If you choose to learn about and apply these strategies, big profits await, putting you way ahead of the typical real estate investor.
While this is not an approach advised for new real estate investors, if you are considering starting out in real estate investing, once you gain some experience and confidence, foreclosures are one of the best methods to both earn a profit and help others.
Three ways to buy foreclosures
If you are looking to get started in investing in foreclosures, you will be looking at making your deals in one of three venues:
- Buying from a seller facing foreclosure. Buyers who face foreclosure are motivated sellers. And a motivated seller is the key to a good real estate deal. Plus, when you buy from a homeowner facing foreclosure, you help the seller in a time of need while earning a nice profit for yourself. Win-win.
- Buying at auction. Once the lender forecloses on a property, they try to sell it at auction. An experienced investor may be able to purchase the property at auction for far below market value.
- Buying from the lender. If the lender receives no minimum bids at the auction, they take possession of the property. But lenders are in the finance business, not the real estate business, and they are often motivated to sell. You can take advantage of this to find excellent values.
Creating profit where there is no equity with short sales
When buying a foreclosed property, it is generally required that the buyer pay off the full amount owed the lender. However, in many cases, paying off the note leaves no equity in the property making the purchase a bad deal.
The experienced foreclosure investor works with lenders to negotiate a “short sale” which means buying the property for less than what is owed. The lender is often happy to unload the property and recoup a portion of the money owed. Your ability to negotiate short sales will set you far ahead of the average real estate investor and earn you bigger profits.
More foreclosure resources
We’ve compiled a vast array of foreclosure real estate resources. Just select “Foreclosures” from the drop-down menu on these pages: How-to Articles, Money-Making Ideas, and real-life Success Stories.
And if you’re ready to get started now and want to speed up your success, be sure to check out this excellent home study course:
About the Author:
J. P. Vaughan was the co-founder and Publisher of Creative Real Estate Online. She wrote the book How to Buy Your Dream House for 1/2 Price (Quantum Publications 1994, out of print). J.P. was also an attorney who practiced law in Michigan until she started investing in real estate full time in 1988. J.P. passed away in October 2015 after a long battle with ovarian cancer.
J. P. Vaughan was the co-founder and Publisher of Creative Real Estate Online. She wrote the book How to Buy Your Dream House for 1/2 Price (Quantum Publications 1994, out of print). J.P. was also an attorney who practiced law in Michigan until she started investing in real estate full time in 1988.
J.P. passed away in October 2015 after a long battle with ovarian cancer.