investing

Before you dive into the exciting world of property foreclosure investing, you should probably be aware of the pros and cons of buying a pre-foreclosed or foreclosed home…

Pros

1. Lower price and higher profit

Pre-foreclosures and foreclosures usually always sell for less than their actual market value – sometimes 20 to 50 percent below the market cost. Among other things, this means that if you turn around and sell the property, you should make a sizable profit.

Nowadays, you can use a short sale to negotiate a lower price with the lender. This is an extremely powerful technique for building equity out of thin air.

2. Rehab potential

Many pre-foreclosures and foreclosures need repairs and renovations. If you know how to rehab a home without spending too much money, you may be able to substantially and cost-effectively increase the value of the home.

3. Lower settlement costs

Since you are often dealing with vendors wanting to get rid of the pre-foreclosed or foreclosed property as soon as possible, you can often get them to agree to lower down payments, better financing options, lower closing costs, and reductions on other settlement costs.

4. Access to the property

Most foreclosure homes are vacant, which means you can often get access to a foreclosed property as soon as you buy it.

Either that or the homeowner knows he/she needs to move out in a short amount of time.

5. More attractive financing

If you’re buying a foreclosure from a bank, they may offer you attractive financing to make the deal more appealing to you.

So what are the cons to investing in pre-foreclosures and foreclosures?

Cons

1. Hidden liens and liabilities

It’s not uncommon for pre-foreclosed and foreclosed homes to carry liens and unpaid taxes. As the new owner, you’ll have to pay these. Sometimes a home owner or seller may not reveal these liens and liabilities to you. However, the good news is that you can find this information relatively easily with a title search and, if necessary, some other research.

2. Poor condition

Just as many pre-foreclosures and foreclosures are ripe for rehabbing… you can also expect many of these to be in extremely poor condition. Unless you’ve budgeted for the required repairs and/or renovations, you may be in for a nasty shock. On the other hand, if you inspect the property or (if buying the property unseen at auction) budget for the worst, such repairs may be well within your budget.

3. Learning curve

Buying pre-foreclosures and foreclosures requires an understanding of the legal foreclosure process. You also need to be familiar with how to locate potential investment properties and, ideally, discover them when they first enter the pre-foreclosure stage of foreclosure proceedings. This can be a hassle for some property investors who prefer the relatively straightforward process involved in buying regular properties. However, once you’re familiar with how to buy pre-foreclosures and foreclosures, you may discover that it isn’t really all that burdensome at all.

Overall, pre-foreclosures and foreclosures are a great investment… provided you’re willing to understand what buying such homes involves, and are prepared for the educated risks. You need the proper education such as with http://www.ForeclosuresUnleashed.net. Most importantly, you need to apply the information that you learn!

Locating high potential pre-foreclosure and foreclosure property investments is a crucial part of the business of pre-foreclosure and foreclosure investing. Especially when it comes to pre-foreclosures, a lot rests on your ability to find promising properties as soon as possible… and before any or many other property investors! Unless you hire someone to find potential investments for you (a good idea in many cases) here are the main sources of information about pre-foreclosure and foreclosure properties that you’ll want to be familiar with.

1. The Local Newspaper

Your local newspaper will typically have a “legal notice” section where you will find, among other things, notices that a certain lender has filed, or is filing, a notice of foreclosure on a particular property. This basically indicates that a property has gone into pre-foreclosure. Alternatively, newspapers also publish notices of trustee sales and foreclosure auctions that are about to occur, including the time, date and place.

2. County Recorder

The local county recorder will keep a database of notices of default. Depending on the county recorder in question, you may be able to search this database online. For example, you may be able to search by “document type” and get all the notices of default, including the relevant owner names and document numbers.

If the online database does not provide details of the loans and properties to which these notices relate, you can still note down the relevant owner names and document numbers, and take this with you to the county recorder’s office. Once there you can review the corresponding documents (i.e. notice of default or Lis Pendens, as the case may be). These will give you the loan details and the address of the properties being subject to foreclosure proceedings.

3. Foreclosure Listing Sites

There are various companies offering lists of foreclosures on their websites. In most cases, you’ll need to pay a fee in order to access such information. An up-to-date foreclosure listing site can certainly save you time in locating information about properties undergoing foreclosure. However, just be sure that the information is, in fact, up to date. There is no advantage – and in fact there is a disadvantage – to paying money for out-of-date information.

4. Property Finders

Finally, you can hire a property finder or “bird dog” to do the leg-work required to find suitable pre-foreclosure or foreclosure properties for you. Rather than you do all the research, you can hire such individuals to scour the newspaper, county recorder’s database and/or foreclosure listing sites.

Even better, though, is to hire someone who has connections in the area you are interested in investing, and who is on good terms with the real estate agents in the area. That way, such hired guns may be able to uncover – and reveal to you – new opportunities as soon as they crop up.

These are the four main sources of information about foreclosure and pre-foreclosure properties. For more details about how to uncover and profit from pre-foreclosure and foreclosure investment opportunities check out www.ForeclosuresUnleashed.net.