|
Beginners Real Estate Investing Guide
Real Estate Investing - Ask
Questions Before Making an Investment
First Time Real Estate
Investor
Real Estate Investing - Planning
Your Investment Strategy
How to Find Real Estate
Investment Properties
Getting a Professional Home
Inspection
Large Profits From Inexpensive
Real Estate Repairs
Real Estate Investing - Costs
and Fees
Real Estate Insurance
and Risk Management
Real Estate Investment Risk
Part 1
Real Estate Investment Risk
Part 2
Getting The Best Return For
Your Investment
Creative Financing
For Real Estate Investors
Real Estate Investment Tax
Considerations
Real Estate Rental Properties
- Great Investment or Nightmare
Real Estate Foreclosures - Great
Deal or Headache
Flipping Real Estate for Profits
Slow Return On Real Estate
Investments
Negotiating for the Best Possible Real Estate
Deals
Real Estate - A Time to Buy and a Time
to Sell
Creating Your Real Estate
Investment Strategy
Investing and Growing
Your Real Estate Portfolio
Commercial Real Estate
Investing
Real Estate Marketing
Understanding Real Estate Law
Do You Need An Real Estate Agent?
What The Real Estate Mortgage
Lender Sees
Do You Have A Career In Real
Estate?
Rural or Urban Real Estate
Investments?
Real Estate Investing on the
Internet
Real Estate Investing
- Property or Paper? |
Real Estate Investing - Introduction
Real Estate Foreclosures
Foreclosures are a real estate investors dream because they offer investors
opportunities, as well as challenges. When a property is being foreclosed
on, the owner of that property is looking for a way out of the situation
- and a good real estate investor has the answer that they are looking for.
No two foreclosures will be the same. However, there are common procedures,
problems, and answers. There have been numerous books and courses that have
been produced on a variety of foreclosure problems and their solutions, but
you can really keep things very simple, with just a little bit of information
- found here.
First, let's look at why a property may go into foreclosure. The owner of
the property has fallen behind on their mortgage payments. When the owner
has not made any payments in a certain amount of time, the mortgage lender
issues a notice of default, which informs the owner how much the past due
amount is, and how long they have to make good on it before the home is
repossessed. For a variety of reasons the owner is not able to get the amount
paid, in that time period, and the mortgage lender forecloses on the property.
The owner must vacate the property, and the property is then either put back
on the market, or auctioned off.
The time period between the notice of default and the repossession of the
property is what the real estate investor is interested in, because this
is his or her opportunity for the greatest profit on the property. If the
property owner knows that they cannot catch up on the mortgage, and that
there is no way to otherwise avoid the foreclosure, they know (or should
know) that their best option is to sell the property for the purpose of paying
off the loan, which in turn preserves their credit rating.
Finding these property owners is easier than you might imagine. All notices
of default are recorded, and made public. They can be found at your county
recorders or county clerks office. Notices are posted at the courthouse,
on the county's website, and in some counties, in the newspaper.
When the investor locates the notice, he or she contacts the owner of the
property that is in default. This can be done via telephone, mail, or with
a visit to the property. The investor may offer the owner various methods
for taking care of the debt.
In many cases, the real estate investor will take possession of the property,
and the responsibility of the loan payment, as well as any past due amount
that is owed. This essentially gives the property owner a quick and easy
way out of the situation, without having a negative impact on his or her
credit. When this is the case, the owner of the property is usually willing
to forgo all or part of the equity that they have in the property, meaning
that the investor can literally obtain the property for exactly what is owed
on it - which is typically a great deal less than it is worth.
With this done the investor has immediate equity in the property once he
has taken it over. Equity is calculated by taking the current market value
of the property, and subtracting the balance that is owed on the property.
The difference is the equity. Because he or she has this equity, they can
now do several things.
One thing that the investor may do is bring the loan up to date, make cosmetic
changes to the proeprty, and then sell it for a profit. The investor may
also choose not to do anything, but instead to bring a new deal to another
investor, so that the new investor takes over the property, and the current
investor gets a profit from the arrangement. A third choice is for the investor
not to bring the loan up to date, and to instead sell the property very quickly,
pay the loan off, and pocket the profit.
Sometimes, however, there won't be much equity in a property, meaning that
the amount owed on it is near or at the current market value of the property.
If this is the case, the investor may choose to enter into negotiations with
the mortgage lender, to get the balance that is owed reduced, on the condition
that the property is quickly sold. The mortgage lender will then be able
to avoid foreclosing, and the investor would make a profit from the difference
in the cost of the sale price minus the reduced balance owed.
These are not the only ways that investors can profit from property that
is in default. There are numerous other ways as well - and they get very
complicated. But these methods are the most simplified. The objective is
to make it as easy as possible for the owner who is in default to get away
from the situation, while making a profit for yourself.
• More
Articles
|
Beginners Real Estate Investing Articles
How to Advertise a Rental
Property
How to Build Equity
in any Real Estate Market
How to Find Motivated
Sellers
Developing a Profitable Real
Estate Investing Strategy
Bird Dogging: Getting Started in
Real Estate Investing
Buying Your First Home
Using Lease Options to Purchase Real
Estate
Real Estate Foreclosures
Increase Your Net Worth Through
Real Estate Investing
Interest Only Mortgages
Real Estate Investing
No Money Down Real Estate
Investing
The Power of the Lease Option
Real Estate Investing Tips
Real Estate Investments
Refinancing Your Mortgage
Loan
Paying Your Mortgage
Selling Your House without a
Realtor
"Subject To" Real Estate
Financing
Using Trusts as a Real Estate
Alternative
Search for Beginners Real Estate Investing Information
|
