subject: Why Invest in Foreclosures? by:Kyle Anderson [print this page] Why Invest in Foreclosures? Why Invest in Foreclosures?
1. Foreclosures are at an all time high which presents an outstanding opportunity.
2. High instant profit margins - for the well trained investor
3. You can buy at a steep discount in many cases
4. The future trend for finding good deals is up borrowers are defaulting on their sub-prime loans, ARMs are resetting to higher percentages, falling property values, balloon notes becoming due, unstable money and security markets causing financial losses, and uncertain economy leading to layoffs
5. Always a steady inventory of new property
6. Most people dont understand the process minimum good information given to the uninformed public
7. Some properties can be purchased for little of your own money
8. Sellers are highly motivated
9. Banks dont want properties they want to get rid of them as quickly as possible
Why Foreclosures are Growing?
Foreclosures are a fact of life. Anytime a debtor breaches an obligation of a security document; thats like a mortgage, deed, or trust something like that, the lender has the right to foreclose on the property. The grantor most likely doesnt want to acquire the property but they do want repayment of the funds owed. Now in todays market we are seeing lenders lowering interest rates, extending loan terms, and theres even talk of forgiving part of the mortgage amount. Even so there are still tons of foreclosures to work. There is an orderly process to the foreclosure which allows an opportunity to cure the situation. However, some homeowners are not in a position to cure that default. This may happen for a number of reasons:
Loss of job
Need for immediate cash
Business failure
Divorce
Death
Mortgage resetting
Job transfer
Out of state owner/out-of-towner
Pre-Foreclosures
Many times you can catch a property before it has gone on to the auction block. This time period is called pre-foreclosure. The property is in default and likely the mortgage payments are several months behind. The property owner may have no means of curing the default. Yet, the time is ticking towards the time that the auction will take place and everything will be lost. Given that a foreclosure on a persons credit record is the single most devastating item preventing any future borrowing for years to come. A homeowner in pre-foreclosure should be very eager and happy to work with you. Without your help they may not only lose their home but their credit might also be destroyed. A fundamental key to making profit in the foreclosure market is understanding why the property went into foreclosure. Perhaps the homeowner had a temporary cash shortage. You may be able to help them and take an equity position in the property in return for rectifying the situation. Or the owner may be financially devastated and just wants to dump the property before their personal credit is destroyed. You could help solve their immediate problem and give them a new start.
Now when we talk about finding foreclosures there are many sources to aid you in finding foreclosures. Hopefully you can find the foreclosure before it has gone too far into the foreclosure process and all possibility of redemption have passed. Again, in todays market its a lot easier to find property in foreclosure than ever before. The following are a few locations to begin the search:
Classifieds
Legal newspapers
Attorneys
For Sale By Owner
Realtors = Short sell/REOs
Auction companies
IRS auctions
Bankruptcies
Probate Court
County Courthouse/Registrar of Deeds this is where it all starts!
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