How to make money with foreclosure properties

Can you really make money now buying and selling foreclosed homes when the market is depressed and dry?

On its flip side, the home foreclosure tragedy has a refreshing tune to play. It is not a bad idea to be in the business even when credit tightens and approval comes in highly measurable drops. The real estate industry shows a grim picture of failure, with several millions of people losing their homes, but you can do niche business and profitably stand out from where many others have failed.

How can you do it? As a clear and concise investment guide, consider the following: Know your purpose and resources. Be opportunity-hungry but incrementally wise. Be non-emotional and ignore the thought that you are feasting on the failure of others. Intelligently invest excess money and leverage good credit reputation into buying your first foreclosed property.

Based on the investment guide, what specifically should you do to make money? Let me share the real-life success experience of my friend and encourage you to follow the processes he went through so that you can move on correctly in the foreclosure business. The steps to make money are as follows: Know exactly your financial purpose for being in real estate.

With the problems that now cripple the real estate industry, never miss the exercise of knowing exactly what you want to get from investing in the "buy and sell" of foreclosed homes. Having a clear financial purpose is very important because it will determine your buying decision, as well as your selling judgment once you have the foreclosed property. First, how much are you prepared and willing to invest in buying a foreclosed home? This should be an amount that you can realistically bear, a value that you can comfortably part with or pay for.

Be conservative and prudent when trying to configure how much you should invest. You are in control of your money and you are the best judge as to how you will spend it. Be contented with what you have than what you can have.

Do not aim for the moon when you can only fly just above the treetops. What is your central idea? It is to buy a cheap property, make improvements on it, and then sell it fast at a reasonable premium? Do you intend to own an additional home, rent it out, and then sell it when property values go up? Do you want to buy a modest property to live in, and rent out your present upscale home at an amount higher than your combined home loan amortization?

Or, do you wish to acquire a foreclosed property, fix it, and then lease it out among bed spacers or multi-family tenants so that you can have monthly additional cash flow?

You have to make a clear decision on which need really motivates you. In whatever situation you are in, it is a must that the income you will get from commercializing the foreclosed property is greater than your investment in acquiring it.

And, you can be more specific by establishing your "return on investment" target. Your answer should satisfy your most compelling need and desire. Be sure you have the resources to start a "buy and sell" venture.

Unless you are just a broker who lets sellers and buyers meet and gets commission from the transaction, it is impossible to make money in the real estate "buy and sell" business if you do not have the personal resources to start with. What start-up resources are required before you even consider the thought of going into the venture? If you now possess these two entry qualifications, by all means, proceed with the idea of making money in foreclosed properties.

Whether you will buy a property in cash for its full purchase value or you will acquire it through a real estate mortgage deal with the bank, you will need money. Note the term "sufficient excess money.

This is money that is not the totality of your personal fortune. Cash is king, keep sufficient amount of it to be comfortably liquid and spend only those that exceed your basic and most essential higher level needs.

Note also the term "good credit reputation. The mortgage bank will track your credit history and will not grant you the loan if your credit rating is bad.

Make a quick financial analysis of your intended investment plan. For illustration purposes, let us consider the real life example of my friend.

Let us assume that you are now going through the same experience that he had. What you have in mind is a 3-bedroom house that you wish to lease out as a bed-spacer or a multi-family dwelling.

Let us extend the analysis. If you want more out of your property, let us make some creative adjustments. You can consider the idea of taking bed spacers instead of multi-family tenants. The idea is to maximize the utility of your property for a much higher return on your investment. By any evaluation standard, you cannot ask for more.

Engage the services of a reputable realtor to coach and guide you. Now that you are all clear with that you want to have and what you want to do, for your best protection and to ensure that you will be doing everything correctly, engage the services of a professional realtor.

This realtor is someone who has an established reputation, an inventory of choice foreclosed properties, a broad network of key contacts in the industry, and a demonstrated competence, including the time and willingness, to act as your legman, guide, and coach.

He can be of great help in the development of a competitive bid, and to a great extent, in the processing of your bid for the property. If it is your first time to buy a foreclosed property, there is great wisdom in partnering with a professional realtor. Otherwise, you run the risk of missing a lot of things in getting the best deal for your money. Find and choose the foreclosed property that serves your purpose.

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Let your realtor do the walking for you in finding the foreclosed property that suits your bed spacing requirement. Give your realtor a clear idea of what you want to happen and he can find for you the best location for your property.

You can tell your realtor of your tenant preference e. Whenever a prospective property is found, make sure that you visit the site with your realtor or any of his authorized representatives who is equally qualified to lead and enlighten you.

Do not be in a hurry, nor make a hasty buying decision. Visit at least 10 locations to inspect, evaluate, and choose from; unless in your first choices, you have already found a property that perfectly matches your need.

How To Make Money By Investing In Foreclosures - irexapezoren.web.fc2.com

To cite my friend's experience in his first purchase, they had inspected 22 properties before finally deciding on the 23rd site that it was the property of his choice.

True to his purpose, my friend had achieved all what he had initially targeted from his foreclosed home purchase. Engage the services of an independent certified property appraiser.

How to Make $/week Cleaning out Foreclosures

After you have found the property of your choice, waste no time in getting an independent property appraiser. Do not overlook the importance of this exercise.

Do it even if you have to pay some reasonable fee. The role of the appraiser is to inspect the place and identify the structural, electrical, gas and water piping, fencing, and other relevant construction defects of the property. At the end of the inspection, the appraiser will tell you how much money you have to spend in restoring the place to a tenantable condition.

The appraiser can even tell you the most realistic value of the property, information that you can use to determine whether or not you will be shortchanged in accepting the minimum bid price of the property.

Make a competitive bid with the bank, all incidental costs included.

You can negotiate for the best possible concessions on the foreclosed property. All your concerns, for as long as they are reasonable, can be included in the bid. If all costs, including the estimated expenses for property repairs, will not materially reduce your targeted returns, make your bid after consulting with your realtor.

Note that your realtor is your most important resource person before and during the preparation of your bid. He definitely knows many things that you do not know as to how to prepare a competitive bid. Find a good and reliable handyman on receipt of a bid award. Assuming that you have won in the bid, you will receive a notice of award, and the foreclosed property will be put is in escrow for 30 days. At this point, be resourceful and take the initiative to identify a good and dependable handyman who can do the needed repairs without costing you an arm and a leg.

Settle for decent but inexpensive repairs. You do not need a high-priced contractor to do the thing. Remember, you are not renovating a mansion or an upscale house, just a bed-spacer unit where your tenants can stay comfortably with reasonable representation. Start quick improvements on the property after the escrow. If you are sure that there is no longer any important issue to resolve after the escrow, start making the improvement on the property. Give your handyman clear timelines for the completion of the project at your pre-determined cost levels.

Do not improperly cut cost on matters that will establish for you a strong element of differentiation from other rental properties in the area. Give your tenants the comfort of their own homes by providing them the standard provisions of a decent and refreshing environment e.

Your tenants will like them and will promote your property, affording you ease of finding replacement should there be any vacant bed space in your property. Initiate marketing effort on the property while it is in escrow. Do not wait for the expiry of the escrow period to promote and market your rental property. Make known to all your relatives, friends, and peers the start of your new business. Strive to build a network of new connections e. Arrange for some co-location advertisements in malls, restaurants, and coin laundry outlets, to name a few establishments that can give good visibility for your rental offer.

If necessary, make inexpensive advertising insertions in leading tabloids or magazines in the area where your property is located. Leave your phone numbers in all of them and always be available to receive each call or inquiry. Get a good lawyer to help you on all legal documentation. Do your homework as a property owner and lessor.

Protect your property and financial interest with pro-forma legal documents that your tenants can sign, giving them a clear message about your firm and fair rental policies. These documents include rental application forms that you can use to check the credit worthiness of your tenants before accepting any one of them. Make credit checks on them, like what you have gone through when you were applying for your mortgage loan.

Without intimidation or bad blood, let your tenants feel that you are in serious business. Establish written house rules that every tenant should follow with regard to their rights and the rights of other tenants. Stay on the safe side by the engaging the services of a lawyer who can craft for you legally binding documents before and after you have started getting in tenants to your property. Establish rapport and trust with each of your chosen tenants.

Before the actual move-in of your chosen tenants, talk with each of them not only to discuss your house rules, but also to emphasize to them in crystal clear terms that you want complete harmony among tenants in your rental property, like one family.

Encourage them to freely communicate with you any problem, issue, or recommendation that they might have to ensure a trouble-free rental environment. At this early stage, you should find good chemistry with each tenant, building rapport and trust and motivating them to consider your property as their own. Evaluate what you have accomplished with your first property. When everything has fallen into its proper place in your first acquired foreclosed property, revisit your financials and ascertain whether your costs are in line with what you have budgeted for.

Determine the stability and predictability of your financial results on this first venture. The reason here is that there might be major repetitive costs that you could have failed to consider by oversight.

If you do, evaluate how this variance impacts your targeted net income.

If it is of great value that significantly reduces your initial expected earnings or reverses your financial results into a loss, you can then start to rethink your option. You can end up selling the property at a reasonable financial gain. If you have good financial results, all according to your plan, then you can move on and profit from your first foreclosed property. Plan for the acquisition of your second foreclosed property.

When all is fine and dandy in your first acquired foreclosed home, using the same business model, quickly consider buying a second unit if your credit rating can still sustain additional mortgage financing.

This is exactly what my friend did. Is this not an attractive incremental income in an industry weakened by a very cold demand climate and severe credit freeze? Transition to be a real estate broker. You may or may not be qualified for a third acquisition. If you do qualify, then go for your third buy of foreclosed property. If you fail to qualify, with your winning experience on your first and second foreclosed home acquisitions, you will have gained adequate experience on the ins and outs of real estate business and foreclosed mortgage financing.

You can continue to generate additional income by being a real estate broker or a realtor yourself. Not a bad idea, because you will not have any financial exposure in brokering real estate deals. You will simply leverage what you already know and be a resource person to new entrants in a field where you have successfully operated as a buyer and seller of foreclosed homes.

In a nutshell, to make money in the buy and sell of foreclosed homes the success formula is: If you have these endowments, you can start to dream of getting everything that the business has to offer. Sign in Recent Site Activity Report Abuse Print Page Powered By Google Sites.

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