Real estate investors cover a broad range of investing opportunities. One of the most rewarding and least risky of the opportunities involves buying foreclosed homes and reselling or leasing them out to others. There is still risk, but with some tips you can make the investment a solid one.
You have need of a type A personality if you want to network yourself enough to the point where you can find a foreclosure before even lenders know about it. If you can make business and personal relationships to the point where you know most of your community, you will probably catch wind of someone missing payments on their mortgage. Don’t be predatory in finding new investments, lest it ruin relationships.
Having a few friends as lenders will allow you to catch on to deals before other investors do. It’s hard to network yourself in with lenders, but sometimes asking about options in getting notified on foreclosed properties will be enough. Lenders don’t like to waste their time finding buyers, so most should oblige to your request and put you on some sort of contact list.
Auctions are common when a lender has given up hope of getting fair market value, and he or she has run out of personal contacts. Auctions are excellent for investors if there is no reserve price- which there often is. Usually the reserve price is below market value, however, as the lender at this point just wants to get lost money back in their portfolio.
Rural populations will have a hard time finding out about new deals, but the rural areas can have some great investments once you find them. Word of mouth plays a key role in finding out about new developments in a small town or city. Larger cities put more emphasis on Internet and publications when trying to find new foreclosures. Subdivisions can sometimes use a mixture of both to find a new foreclosure listing.
Before allowing yourself to be accentuated with excitement in finding a listing, realize that most lenders will fight to get fair market value if they can. It’s hard to find a listing that is going to be profitable- but it’s still very possible. Have an appraisal done to verify that the investment won’t be made in false hope. Also have an inspector verify that the home is safe to live in, free of difficulties, and ready to move in by you or tenants.
Final Thoughts
Real estate can be a tricky business. Educate yourself the best you can so that you will increase chances of finding good profits in reward of your efforts. Consider taking real estate courses or using Internet resources to help confirm that the next purchase will be a good one.
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