Nobel Finance Sydney – Money Matters Newsfeed

by Kevin Harbor 

Investing in foreclosures

The topic of investing in foreclosures has always been correlated with getting rich quick. But the truth is, investing your hard earned money in properties that have been foreclosed on or repossessed by the bank or pre-foreclosures can lead to financial disaster for the inexperienced real estate investor.

Investing in foreclosures is not for the faint of heart. It does require knowledge of the local real estate market but more importantly it requires that you know what is a deal and what is a dog. Another required skill set would be deal structuring. The latter of which being the most important, in my opinion, when investing in foreclosures.

What I mean is, how you purchase a particular property. One reason why I have had great success investing in foreclosure is because I only buy properties that are at least 40% below market value. You might say, but I can’t find deals like that. And, that’s just not so, you can. But it will involve you being patient and passing on a lot of deals because they do not fit your criteria. I have set a personal purchase requirement of 60 cents on the dollar or less, and I don’t vary. If the deal doesn’t meet my criteria, I just pass on it.  {continued}

Once I find a deal the first thing I do is tie it up so that I don’t lose my deal to the competition. This is where it gets tricky. You have an array of techniques to choose form when structuring your deal. Depending on the type of deal it is, whether it’s pre-foreclosure or post foreclosure, you may want to use an exclusive option instead of a purchase agreement with an extended closing date. You might do a subject-to deal instead of lease option agreement. There are just to many ways to explain in one article but depending on the circumstances of the foreclosure you’re investing in there are major benefits and major drawbacks with each one of these purchase methods.

There is really good money in investing in foreclosures if it’s done the right way. I would recommend that any investors looking to get into the lucrative field of foreclosures take a foreclosure-training course or seek education from a mentor first. Lots of things come into play when you purchase these properties. And, if you’re buying the foreclosures to hold for rentals, you better make sure you checkout the neighborhood before you buy.

The short explanation is that some neighborhoods just don’t work no matter what the purchase price. I also only buy foreclosures in nice areas. It just makes since because if you buy a property cheap in a bad neighborhood, who are you going to rent it to? What kind of person is going to buy it from you?…. You’re asking for a problem!

When you buy in nice areas, you don’t have a problem renting or even selling specifically because of the neighborhood conditions. Remember, you can never make a bad deal good. But you can make a good deal great. Don’t look for the cheapest deals; those aren’t deals, that’s why they’re so cheap.

Not knowing any one of these points can leave you holding the bag on what looked like a good deal because it was a foreclosure, but turns out to be the beginning of a financial crisis for you. The way it starts is, you can’t find a renter or you can’t sell the property and, you’re making all the payments while trying to keep from losing your own home. Not good.

Good deals come from people situations, like divorce or job loss etc not just price alone or because it’s a foreclosure.

Investing in foreclosures can be profitable if you know what to look for. This is where the knowledge part comes in.

For more information on investing in foreclosure training Visit: http://kharbour2.4closures.hop.clickbank.net/

About the Author

I am a licensed realtor and experienced real estate investor. My expertise is in the foreclosure sector of real estate investing but I am well adept in several other real estate sector as well. I have done hundreds of real estate transactions from subject-to deals, to lease options and commercial income producing investments.