Buying foreclosure real estate can be difficult, frustrating and at best a total waste of time. That is, it can be all of those things to an unwary new investor straight out of a ?Make Big Money In Foreclosure Real Estate? seminar. For the knowledgeable investor however, foreclosure real estate really can be a satisfying source of good income ? and a golden opportunity for first time homebuyers.
The Right Type Of Person
Most home buyers shopping for a personal residence do not even consider foreclosure property because of the imagined problems. But they should. It is puzzling in a way. There are many couples starting out without much money or credit who buy a ?fixer? and spend considerable time and money fixing it up while they are living in it. They then turn around and sell it to move up to a more expensive fixer and begin the process all over again.
If this describes you, you should really consider a foreclosure property. But you need to equip yourself with a little knowledge first so you don?t suffer the pain and disappointment common to so many trying this route. Let?s start with the basics.
Foreclosure or Pre-foreclosure
The term ?foreclosure? brings to the minds of most people a scene in which a home is auctioned off on the court house steps and you bid against other interested investors. You do not want to do this. It is hard to get the edge on the experienced bidders who have done this many times. What you want is a ?pre-foreclosure? property.
A pre-foreclosure property is one on which the bank has begun foreclosure because the owner has missed several mortgage payments but it has not yet reached the auction sale stage. A key to successful pre-foreclosure investing is to build trust with the homeowner so that you can gather the information you need and move quickly to put together a deal that everyone will agree to.
Pre-foreclosure Properties Can Be Profitable
Done correctly, buying a pre-foreclosure property can be a profitable experience even for a first time home buyer. You have ample time to research them because you can buy them up until the day of the foreclosure auction. When you buy a pre-foreclosure, you help save the homeowner?s credit by avoiding a foreclosure auction. You should keep this in mind. You are not taking advantage of the homeowner in distress. You are helping him/her avoid a current and many future credit related problems. Pre-foreclosure investing makes everyone involved a winner.
Lenders typically don?t bother explaining borrowers? rights and options. They just want to collect their money. You have the opportunity to help homeowners avoid foreclosure, salvage their credit rating, and get on with their lives. And you can gain a home of your own ? or resell it and make money by doing it.
You can end up saving tens of thousands of dollars on the purchase of your home by investing in a pre-foreclosure property. They are your opportunity to buy low and sell high, quickly maximizing your equity.
Repairs Will Be Needed
It is not all gravy. Most of the better opportunities you find will need a lot of tender loving care to get them back in shape. They may need carpeting, up-dated or repaired appliances, electrical or plumbing. Roofs may need to be replaced. All of them will probably need painting and quite a bit of landscaping work. If a person is short of money and facing foreclosure, these things simply do not get any attention.
Summary
Buying a pre-foreclosure property can be of a benefit to both yourself and to the current homeowner. It is not always easy but it can be very rewarding. Unless you are a well qualified handyman yourself, you need to get an estimate from qualified professionals on what it would take to bring the home up to standard. Don?t rush or get discouraged. Buying a pre-foreclosure home gives you plenty of time to evaluate everything.
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