Financial Success with Foreclosure Investing

Published by julia | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Real Estate

If you’ve been considering making a living in real estate, you’ve probably heard how valuable foreclosures are to an investor’s portfolio. The main reason for this is because foreclosures are typically priced low, and have an outstanding potential to sell high. In most cases, foreclosures can be had for well below market value, especially if they’re bank-owned. While finding a good deal on a foreclosure is the first step in the process of making money, it’s by no means the only one. You’ve got to do a little bit of extra work if you’re going to make the serious cash you envision on your foreclosure investments.

Houses end up in foreclosure when the homeowners can no longer afford the payments. When this happens, the bank or company that provided the mortgage loan takes the house back and tries to sell it at auction. There are great bargains to be had at foreclosure auctions. However, if the house does not sell at auction, it becomes a bank-owned property. Since banks aren’t in the business of managing properties, they typically want to get these properties off of their books as soon as possible. This is where even greater discounts can be found, as banks are usually quite motivated sellers.

Whether you get your foreclosure from an auction or from the bank, there are several approaches to making money with it. One of the most common ways is to fix the property up a little (without going to too much expense) and then re-selling it at a profit. These are called quick flips, and are very popular among investors. Usually, the house will need only minimal cosmetic work, such as a new coat of paint or new carpeting (which can be bought inexpensively from warehouses and overstock companies). Sometimes, the house is already in great shape, and was obtained at such a low price that it can be sold at a profit without any repairs at all!

You can also make money on foreclosures by becoming a landlord. In this situation, you simply rent out your foreclosure property and collect the monthly rent payments. The payments should be enough to cover your mortgage and any potential future repairs, while still leaving you with $50 to $100 free and clear profit each month. With so many people losing their homes and needing rentals, finding tenants should not be difficult, especially if the house is in a good neighborhood.

Many foreclosure properties can even be divided up into apartment units, if the house is big enough. This can double, triple, or even quadruple your monthly income from the property. The important thing to remember is to do your research first, and make sure your financial projections are accurate before jumping into foreclosure investing. If you’ve done your homework and know what you’re doing, you can potentially make a comfortable full-time income with these properties.