In recent years, there has been much hype around the idea of investing real estate foreclosures. On the one end, you have people who claim you can become a millionaire virtually overnight by buying properties for "pennies on the dollar." On the other hand you have people who claim that it is not possible to make any real money with foreclosures. The truth is somewhere in the between.
In general, there are 3 stages of foreclosures where you can make money:
1) Pre-foreclosure: This is where the owner has defaulted on the loan but the foreclosure process has not yet officially begun. By going to the local courthouse, you can find out who in your area has defaulted. Some investors contact these people directly, and work out deals with the owners, often purchasing the homes at a discount in return for bailing the owner out of their debts.
2) Auction: These are homes that have been foreclosed on, and are sold by banks and government organizations. In most cases, buying at an auction is a bit of a gamble, since in most cases you will not have a chance to inspect the home. The homes are also sold "as is" and you may get stuck with hefty repair costs. Competition at auctions can be quite high, so you probably won't get as good a deal as you may think. Also, you will need to put 10 - 20 % down on the spot if you win the auction.
3) REO: When a home does not sell at an auction, it becomes an "REO" and goes back to the bank, or government organization like HUD of Freddie Mac. You can find these deals on websites like Foreclosure.com or by contacting these organizations directly.
There is money to be made at each of these stages, but I would recommend beginners to specialize in only one of these stages. If you want to get into this game you should understand that it is a lot like running a business, and will require time and research if you want to do this successfully. If you do your homework, it is definitely possible to make a a lot of money by learning how to buy foreclosures.
Here are additional resources if on how to buy foreclosures:
|Build Massive Wealth With Foreclosures|
This is an excellent foreclosure course by a real-life foreclosure expert who reveals the tricks and secret formulas he uses to make massive profits in the foreclosure industry. I like this course because it actually provides a step-by-step formula for success that takes out the guesswork. It is also relatively inexpensive (considering that some real estate seminars charge $3000 or more).
|Foreclosure.com - Largest Listing of Foreclosures!|
America's largest foreclosure database with over a million listings, Foreclosure.com can be used by both investors as well as homebuyers looking to save tens of thousands of dollars on their purchase. This is probably the one website you must have a membership with if you want to learn how to buy foreclosures.