Hook Me Up!

There is really no simple answer to this interesting question. The answer will more than likely depend on the individual. By considering a few basic concepts you can determine for yourself whether you have what it takes to get into buying and flipping foreclosures. You may see the late night infomercials talking about how much anyone can make by investing in foreclosures. Before you dive into your wallet and fish out your credit cards here are a few things to be considered. When you’re not investing money you’ll be investing time to learning and getting things done. You’ll have to get over any shyness as you’ll be meeting and talking to plenty of people, often having to make first contact yourself. Those easily discouraged by rejection need not enter into this realm as you’re likely to hear 100 no’s before you hear 1 yes. After considering this and you’d still like to move forward you’ll want to familiarize yourself with a few key concepts.

The first concept in buying and flipping foreclosures is knowing what a foreclosure is. It is basically a home that has been repossessed by the lending bank for nonpayment. This is good because the loan balance on the home is $0 so the selling bank makes pure profit from the sales price. Normally when you buy a home from a person they are still paying off a mortgage (money they borrowed to buy the home in the first place) which must be paid in full before the seller can sell or make any profit. Along with other factors this is the main reason why foreclosures can be sold so cheap. The downfall of this is that banks maximize their profits on a selling a home by doing as little repair work to a home as possible and often sell homes as is. This will leave a buyer not knowing what problems a home may come with or more importantly how much it will cost to make necessary repairs. Investors know this in advance and adjust their strategies accordingly.

Next is the concept of finding foreclosures. Today foreclosure is a huge buzz word in the world of real estate and pop culture in general. Because of this foreclosures are easier to find nowadays compared to being almost nonexistent in years past. The reason for this is that banks make money by collecting interest on the money they lend. When they have to take back a house that someone stopped paying for it takes money away from monies used for lending and that isn’t something they go around advertising. However due to the recent drastic rise in foreclosures more sources have popped up to help bargain seekers and investors locate foreclosed homes. If you’re a serious buyer you can go to through a real estate broker for free and they’ll do all the leg work for you once you tell them what you’re looking for. There are other foreclosure home locater services that may charge a fee that you can use at your leisure from the comfort of your home computer. There are a few that have a free service like RealtyStore.com’s Free 7-Day Unlimited Trial.

Finally is where the money comes in. The best suggestion is if you get to this stage and you haven’t done it already do some research on investing and your local real estate market so that you know what you’re doing. Good investors normally have an idea of the amount of money they will make and how they will make it even before starting an investment. Here the idea is to make sure that you can “flip” or quickly sell whatever foreclosure you plan to buy. There are many ways to accomplishing this goal which goes back to doing your research to know which way will work for you and your situation. Most successful investors use a Real Estate System that takes most of the guess work out of the process of what to buy, what to sell, and ensures that they make profitable deals. One of the biggest myths about real estate investing is that one needs a huge bank account to start with. Nowadays creative individuals are making thousands of dollars by using little to no money of their own and without having credit good enough to get a loan. Some famous finance authors like Robert G Allen (Multiple Streams of Income and Nothing Down) have begun offering programs for those looking to begin investing with little or no money.

This entry was posted on Friday, June 20th, 2008 at 10:05 am and is filed under Real Estate, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.