You might be looking for "How to make a zillion dollars in 3 months", well, you won't find that here but if you want some practical tips, you came to the right place. Read on ...
To the newbie real estate investor, foreclosures can look temptingly attractive. Who wouldn't want to make a quick profit of 50% or more? But whether a foreclosure deal is really sugar or merely sweet-tasting arsenic depends on a list of complex factors.
Foreclosure is an officially permitted process in which a mortgage holder repossess a property due to failure to pay on a loan. Some states in the U.S. allow 'strict' foreclosure — the borrower has a definite time in which to bring the debt up to date, after this, the title reverts back to the lending institution.
To the newbie real estate investor, foreclosures can look temptingly attractive. Who wouldn't want to make a quick profit of 50% or more? But whether a foreclosure deal is really sugar or merely sweet-tasting arsenic depends on a list of complex factors.
Foreclosure is an officially permitted process in which a mortgage holder repossess a property due to failure to pay on a loan. Some states in the U.S. allow 'strict' foreclosure — the borrower has a definite time in which to bring the debt up to date, after this, the title reverts back to the lending institution.
You want to stay out of any legal processes going on concerning a property. Don’t get tempted to jump in and help the current owner in hopes of partial or whole ownership, this is suicidal. Pick another great deal. Never fall in love with a property. You have to maintain a business-like demeanor in all your dealings.
Be sure you understand that in many foreclosure proceedings, a borrower might have the 'right of redemption'. This legal claim will let them have a particular amount of time in which to 'cure the loan'. That is, they are allowed to make back payments, shore up credit, etc., and then they are allowed to reclaim property title to, and the possession of, the property. Beware!
As soon as the foreclosure procedure is complete, or at minimum unavoidable, you may initiate an action plan to obtain the real estate. Watch for transactions in which, at least, a Notice of Default has been given out.
Public sales on foreclosed possessions are common but can be complicated. Always do your homework before actually making a bid on a property. There's no alternative for gaining first hand familiarity of the physical state and legal standing of a property.
Be sure to take into account that foreclosures are sold 'as is ', or, in its present condition. Contrasting other property sales, no warranties are made available and no title insurance approved.
At least, you'll be required to have a professional inspection carried out, even if you are a well-informed investor. Some investors are, of course, qualified inspectors themselves — besides wearing various other hats.
The property does not need to be free of every little fault, but you'll want to be aware of the roof - does it or does it not need to be replaced, that the plumbing is ok, there are no severe foundation cracks, or possibility for flooding, etc. If any of those are there, they can be satisfactory if you're searching for a 'fixer-upper' and are prepared to invest the time and funds to make repairs. Mark down your offer for that reason.
Soon you will hear about a 'short sale' deal. That is, this comes about when a lender is prepared to allow lower cash settlement for a property than is outstanding on the loan now.
And yet another kind of foreclosure situation is the REO — real estate owned (by the lender). Usually these are properties that were auctioned but no one bought them. You can, potentially, get an extremely good deal, but you will need to exercise extreme caution and keep your eyes wide open.
Ok, so bear in mind to follow a line of investigation. Have a systematic inspection done and complete a satisfactory title search. Any key defects or impediments in the form of tax or other liens have to factor big in your strategy.
Real estate, like other endeavors in life, requires diligence and a grasp of the fundamentals to be successful. Learn to tell the difference between a good deal and one to walk away from without losing your shirt in the process.
All things considered, real estate investing is still the best game in town. So go out and make your fortune and say 'Hi' to Donald Trump for me!
Find out how to make money investing in foreclosures and flipping real estate properties by visiting http://www.successful-real-estate-investing-tips.info/ , a popular real estate investing website that offers advice, tips and free real estate investing advice
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