Property Investing and Pre Foreclosure Homes

By MyVine | May 16, 2011

A home in pre foreclosure or foreclosure presents an excellent opportunity , so make sure to check out foreclosed property. National Association of Realtors said that there will be more than 1,000,000 foreclosures within the next 2 yrs. . Before you consider purchasing a property in the foreclosure marketplace, be sure to do your home work. Purchasing a house in foreclosure can be quite simple , but but there are risks . (You might consider using a reverse mortgage product to fund your property investments).

commonly, you can buy one through the state process. It’s generally held at the local courthouse in the clerk’s part or in front of the foreclosed house. Property Investing from buying at an auction, probably represents the highest potential return, but also the most risky.

You might want to think about purchasing a home in pre foreclosure. Pre foreclosure properties can be located by studying the public notices about homes in nonpayment. The data is available from such Internet firms as Homeforeclosures.com, HomeForeclosure.com and RealtyTrac.com. You’ll pay a fee, though, for their services.

There probably won’t be much competition , if any, because theproperty usually isn’t up for sale , It’s a private deal . What you do is make sure that the amount you offer is enough to cover the bank loan, well below market value. . What makes it backbreaking for peopleis making that initial contact with the proprietor who hasn’t put a for-sale sign up yet .

Selling retail after purchasing a property wholesale is one of the best ways to do an investing transaction. The idea of flipping is not very popular these days, butin reality , that is what wholesaling is . All you’re doing is buying at a discounted price and than reselling it in a short flow of time. There are different types of people involved in wholesaling, such as scouts, dealers and retailers. If you need cash to fund your project, you might consider refinancing your mortgage.

A scout or bird dog , if you will, is someone who will accumulateinformation , finds potential deals and then sells the information to other investors. When you become a bird dog , very little experience or money will be required. The scout finds distressed homes , gathers the information and then presents it to another investor for aprice . A scout can make $500 to $2000 on each lead he provides to an investor, depending on the price of the property and the potential earnings.

A dealer will locate a distressed property and enter into a contract with the owner. Dealers sometimes buy properties wholesale and then sell it retail or sell the contract to another investor. When you are a dealer it is more risky than being a scout because dealers use their own funds to secure the deal. A dealer doesn’t have to deal with tenants and can make a bigger income withouteven fixing up the properties .

What a retailer does is buy properties from dealers. Retailers fix-up properties using their own funds , hence, assuming the greatest risk, but also receiving the greatest profit.

Topics: Buying Tips, Foreclosures, General, Investing | Comments Off

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