The first thing I suggest regarding foreclosures is that you learn all you can about this topic. Foreclosures are considered a very complex type of real estate investment. The second important thing for the real estate investor is to study the local market. Be sure to follow up to see what the properties sold for and how quickly. In my opinion, you must be an expert on local property values ​​if you want to be a successful real estate investor.

Where do I find foreclosure or pre-foreclosure offers? The best way is to go to court and look up the notices of default / NOD and the trustee’s sale / foreclosure listings. Other things you might consider finding an experienced agent to show you foreclosure listings. They know which websites offer up-to-date foreclosure listings. Start interviewing brokers to find one who is also an experienced investor, who has done what you plan to do. When you buy these properties, the clearing house pays the agent’s commission. The advantage of going to court is that you have a good chance of making a deal before anyone finds out. When it is on the Internet, thousands know it. If the foreclosure sale is an auction in your area, start your bidding small and see what happens. Know how far you will go before bidding begins, as bids go fast. You may want to start the bid at $ 2,000, view the offer, keep bidding when necessary, and stop your bid when the amount is exceeded that is okay.

Get a foreclosure attorney if you need help (you will most likely need it if you are a beginner). Another thing to keep in mind is the redemption period (if you are doing business in a redemption state). Some redemption statuses, for example, have a 6-month redemption right. Which means that the original owner has 6 months to buy back his property. It can be even longer if the home was purchased in a year when the redemption period was 12 months before they changed the law to 6 months. Now the new buyer (you in our case) will be stuck with the 12-month trade-in. Which means that you cannot sell during that period.

This, in turn, can make a big difference in maintenance costs for you. To be clear, let’s say you bought a home at a foreclosure auction for $ 60K on Jan 2, 200X, the amount owed to the bank was $ 30K they received after the sale and the owner received their check for $ 30K (minus all expenses in most states, amount over owed goes to landlord). The former owner arrives on May 29, 200X and can legally buy back the property for $ 60K (plus all other transaction costs). If the house was in bad shape and you put in money to fix it, you might consider it to be gone too. The important thing to consider in redemption statements is the redemption date and the costs of holding (buying well is always a number one rule in any real estate business).

Now let me show you a general pre-foreclosure real life scenario where you will probably find that the numbers may vary, but the concept is the same. A holder of promissory notes (private party or lender) wants to get out because the owners defaulted on their mortgage. The balance of the promissory note is $ 25,000 and the house is worth about $ 60,000. (We assume that it is a first mortgage duly executed and registered). Offer the note holder $ 17,000 to $ 19,000 for the mortgage (cash or paper if circumstances permit). After you’ve bought the mortgage, you’ll have to get them (the original buyers) to grant you a deed in lieu of foreclosure by offering them some money (offer them $ 15,000 or more in our case) to move in and do the deed or the foreclosure. they. Don’t forget to get TITLE INSURANCE. (To make sure you’re not getting into some kind of trouble, which could be quite worrisome and expensive if it’s not noticed in time.) Let’s say you paid $ 19,000 to the bank and $ 20,000 to the winning owner
$ 39,000 + $ 3,000 closing cost (maximum) = $ 42,000. You have $ 18,000 in equity. You can keep it for rent or sell it for a good profit.

Sometimes the owners don’t move. This is a trick that works great if you foreclose and the occupants (it also works with tenants if you have rents and have the same problem) don’t want to leave. Offer them a moving allowance of $ 1,000 if they move within 10 days, $ 800 if they move within 14 days, $ 600 in 20 days. It won’t be long until they leave. The amount varies depending on what the deal allows. When you find a property well below market, never take more than 50% of its market value. Instead, share it with the owner. There are some consumer protection laws and you cannot win “unfairly” because of someone else’s misfortune. Some states (California, for example) have strict rules, so if you want to play the foreclosure game, you need to learn and follow the rules. If foreclosures are too complex for you, there are other ways to make money in real estate, but if you come across a good deal prior to foreclosures or foreclosures, consult a local foreclosure attorney to guide you through. of process. If you want to invest in foreclosures, learning your state’s foreclosure law backwards and forwards is very important.

Here are a couple of links to websites with articles on real estate investing where you can learn different techniques from other investors: http://www.buying-investment-property.info/ and http://www.realestate-investinginfo.com /

One good thing to remember that will save you time, money, and effort is to always try to work with motivated salespeople. Often times, homeowners in pre-foreclosure are in denial about their situation and need to be brought back to reality. You have to know how and what to talk to them so that they sell you the property at your price. You have to motivate them. There are tricks in the trade. Learning is an endless journey.

Use the correct real estate forms when buying and selling. If you don’t have any forms, here is a website that can print forms for free: http://www.realestate-agentsinfo.com/

Good luck!