Foreclosure Investing Foreclosure Investing

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Foreclosure Investing

Investing in a foreclosure can be a very rewarding and profitable process. If done right you can help someone get out of a bad situation in their life, and make money for yourself. Before investing in foreclosures it is important to understand the different types. Not all foreclosures are the same, there are a few different types and stages…

 Pre-Foreclosure

A pre-foreclosure is when a homeowner is behind on their mortgage, but the bank has not yet come in and foreclosed it. This is a small window of opportunity for the homeowner to either catch up with their payments or sell to an investor. After a payment is late, the homeowner has 120 days to fix their problem or else the lender can start the foreclosure process. Getting in at the pre-foreclosure phase will eliminate the lender and allow you to deal solely with the homeowner. This allows for a smoother process.

 Short Sale

A short sale is when the amount of money owed by the homeowner is higher than the value of the home and the lender is willing to take less than what is owed. Unlike pre-foreclosure, you have to deal with the lender because he has to approve the deal. The reason a lender will take less than what is owed is that it is easier to take a small loss than deal with the stress of a homeowner who has no money to make payments.

Auction

In some states, like New York, when a house goes into foreclosure it is subject to being put up in an open auction. This is where investors and residential buyers will go to town hall and bid on the property. This can be very profitable because you can get a house for a very low cost. What you need to know before bidding on an auction is that most of the houses for sale will be site unseen so you will have to buy the property without getting inside of it.

REO Properties

REO deals are when the lender takes possession of the property instead of going into foreclosure. This is the hardest deal to land as a real estate investor because most of these lenders want to sell the home as quickly as possible to an agency. They are in the business of lending, not real estate. There are definitely opportunities within this category but it will definitely take more time and diligence.

                   NOW GO OUT THERE AND FIND SOME FORECLOSURE DEALS!

Investing in a foreclosure can be a very rewarding and profitable process. If done right you can help someone get out of a bad situation in their life, and make money for yourself. Before investing in foreclosures it is important to understand the different types. Not all foreclosures are the same, there are a few different types and stages…

 Pre-Foreclosure

A pre-foreclosure is when a homeowner is behind on their mortgage, but the bank has not yet come in and foreclosed it. This is a small window of opportunity for the homeowner to either catch up with their payments or sell to an investor. After a payment is late, the homeowner has 120 days to fix their problem or else the lender can start the foreclosure process. Getting in at the pre-foreclosure phase will eliminate the lender and allow you to deal solely with the homeowner. This allows for a smoother process.

 Short Sale

A short sale is when the amount of money owed by the homeowner is higher than the value of the home and the lender is willing to take less than what is owed. Unlike pre-foreclosure, you have to deal with the lender because he has to approve the deal. The reason a lender will take less than what is owed is that it is easier to take a small loss than deal with the stress of a homeowner who has no money to make payments.

Auction

In some states, like New York, when a house goes into foreclosure it is subject to being put up in an open auction. This is where investors and residential buyers will go to town hall and bid on the property. This can be very profitable because you can get a house for a very low cost. What you need to know before bidding on an auction is that most of the houses for sale will be site unseen so you will have to buy the property without getting inside of it.

REO Properties

REO deals are when the lender takes possession of the property instead of going into foreclosure. This is the hardest deal to land as a real estate investor because most of these lenders want to sell the home as quickly as possible to an agency. They are in the business of lending, not real estate. There are definitely opportunities within this category but it will definitely take more time and diligence.

                   NOW GO OUT THERE AND FIND SOME FORECLOSURE DEALS!

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