Build your army of pre foreclosure headhunters. Make it widely known to everyone you come into contact with that you buy pre foreclosure homes (you’ll probably have to educate them a little about what to look for). Let them know you’ll offer them a bounty (say, $500) if you end up buying a property they tell you about. Tell your mail carrier, your grocer, your neighbors, your hair stylist, your kids’ parents…and give each of them a stack of your business cards.
]]>In a falling market, flipping homes can still be profitable, because your holding period is normally too short for the value of the property to fall lower than the discount price at which you got it. And since you will have raised the value of the property by rehabbing it, your likelihood of making a profit is still high.
Additionally, in the current market, you’ll find many opportunities for flipping homes among foreclosure properties whose owners want to unload their houses quickly in order to get rid of their financial burden and salvage their credit.
In fact, many people who make money flipping homes only deal with foreclosure properties, which can often be purchased at well below the market values. Though foreclosure properties may sometimes require more rehabbing than do other undervalued homes, they can still provide you with great opportunities to profit at flipping homes. Flipping homes can be highly profitable in any market, but there are definite advantages to flipping homes in a soft market.
]]>How much money will I need to spend in order to make the house saleable?It’s not a foreclosure investing deal unless you can make a profit. Many would-be investors underestimate the cost of necessary repairs. If at all possible, get an inspection, or at least walk through the house with someone who is knowledgeable about what needs to be done to make the house livable and safe. If you’ll be doing the work yourself, get estimates for material costs. If you’re hiring someone else, get estimates for their total costs to you.
How much time will be required to make the house livable?Be realistic. If you’re doing the repairs yourself, do you have the knowledge, skill, and time to make this foreclosure investing venture profitable? Many a would-be foreclosure investing tycoon has bought a “fixer-upper,” with great do-it-yourself plans to fix it up and sell it at a profit. In many cases, they’ve found themselves years later, still working on a seemingly endless bunch of repairs. And remember, a house that was obviously fixed up by a “do-it-yourselfer” (e.g., with an amateur drywall job) is not likely to be attractive to many buyers.
Is the house in a desirable neighborhood?This is not to say that your foreclosure investing has to take place in only the “best” neighborhoods, but you should keep in mind the level of appeal the property will have to potential buyers. Will a variety of people find the area safe and pleasant? Surroundings are part of the package you’re selling..
If I ask a realistic selling price for this property, will I still make a profit?
With rare exceptions, you can only sell a property at a price the market will support. In foreclosure investing, even if you’ve spent a pile of money on repairs and upgrades, you can’t expect to sell a property for $250,000 when the highest-priced homes in the area are going for $150,000. This is key to foreclosure investing success.
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When you buy a pre foreclosure property, you’ll get stuck with huge closing costs. The only closing costs you will have when you buy a pre foreclosure house are the cost of the title insurance policy and the cost of recording the deed.
Most pre foreclosure properties are money pits. Though it’s true that some pre foreclosure homes will need extensive (and expensive) repairs, many, many owners who find themselves in pre foreclosure have beautiful homes. What’s more, because of the situation they’re in, they’re often willing to sell to you at a below-market price, simply to get out from under their burden. But you shouldn’t completely overlook those fixer-uppers, either. Sometimes, you can get them for such a bargain that they’ll turn you a handsome profit, even after the expense of repairs.
Pre foreclosure investing does require some caution, as well as some common sense. But don’t let naysayers talk you out of investing in a market that can yield huge profits.
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With an initial outlay of just a few hundred dollars, you can really make money at real estate by buying these pre foreclosure properties at substantial discounts up till the time of the auction, then reselling them at a substantial profit. You don’t have to go through rigorous financial scrutiny or have a large down payment to make money at real estate in this way, because you’re simply taking over the existing financing of the pre foreclosure property.
MYTH: It’s just too risky.
Real estate is one of the safest investments you can make. We all know what can happen with the Stock Market; and savings accounts and CDs don’t bring a high enough or fast enough return for you to enjoy a profit. Real estate investing can bring large and fast profits. Of course, every investment has some risk, but if you educate yourself before investing, you’ll find making money with real estate is not only a fast way to turn big profits, but a sound way to invest.MYTH: You can’t invest in real estate if you have bad credit.
It’s always easier to make any financial move when you have good credit. But you don’t need good credit for making money in real estate. There really are many ways to invest in real estate, even if you have bad credit. Using an investment partner, buying foreclosures, and flipping homes are several ways of making money with real estate―no credit required.