Consider Pre-foreclosures For Your Real Estate Investing
A common concern with anyone entering into the real estate market is that they aren't sitting on mountains of money to make the kind of serious investments needed to turn a profit. While it is true that you are going to need a certain level of available funds to get started, that doesn't mean you're going to need need millions. One viable option would be to consider the pre-foreclosure market as your ticket into the game.
As you can imply for its name, pre-foreclosure houses are those properties that a bank has targeted to begin the foreclosure process. These are homes that are in default, but haven't been surrendered to the bank yet. How can this benefit you as a potential buyer? First of all, when an owner has gone into default on their home loan they are no longer making payments to the bank. This means all parties involved are eager to sell and close the books on the home that is essentially in limbo.
Another benefit with choosing pre-foreclosure homes is that it makes your real estate investing more focused. This is a very specific segment of the marketplace. As such, you only need to concentrate on this one area instead of trying to cover a wide selection of properties which might end up having you chase your tail.
This level of focus comes into mind when you consider that you'll be approaching motivated sellers. These are the "Holy Grail" of sellers for anyone in the real estate game. A motivated seller is someone who wants to get out from under the burden of ownership. In a pre-foreclosure, that burden has become intensified. This doesn't mean you are setting out to rip off anybody. It just means that your offer of a swift resolution for their financial woes might not be met with endless haggling.
Speaking of haggling, you'll also find that with pre-foreclosures the lenders could be more receptive you offering discounts. As with any aspect of real estate investing, the trick is to understand what is at play. By familiarizing yourself with the reasons why lenders would offer discounts in the first place you'll be in a stronger bargaining position. Bottom line: if you don't ask, you'll never know!
Finally, buying a property in the pre-foreclosure phase allows you to avoid the "shark tank" of a foreclosure auction. You won't need to be worrying about trying to outbid another potential buyer in the fury of an auction. That's an entirely different set of skills to develop. Avoiding that environment allows you to concentrate on the sale without any distractions. Once the deal is closed, you can move onto the options to rent or flip, but at least you will have secured a property that will allow you to make those decisions.
As you can imply for its name, pre-foreclosure houses are those properties that a bank has targeted to begin the foreclosure process. These are homes that are in default, but haven't been surrendered to the bank yet. How can this benefit you as a potential buyer? First of all, when an owner has gone into default on their home loan they are no longer making payments to the bank. This means all parties involved are eager to sell and close the books on the home that is essentially in limbo.
Another benefit with choosing pre-foreclosure homes is that it makes your real estate investing more focused. This is a very specific segment of the marketplace. As such, you only need to concentrate on this one area instead of trying to cover a wide selection of properties which might end up having you chase your tail.
This level of focus comes into mind when you consider that you'll be approaching motivated sellers. These are the "Holy Grail" of sellers for anyone in the real estate game. A motivated seller is someone who wants to get out from under the burden of ownership. In a pre-foreclosure, that burden has become intensified. This doesn't mean you are setting out to rip off anybody. It just means that your offer of a swift resolution for their financial woes might not be met with endless haggling.
Speaking of haggling, you'll also find that with pre-foreclosures the lenders could be more receptive you offering discounts. As with any aspect of real estate investing, the trick is to understand what is at play. By familiarizing yourself with the reasons why lenders would offer discounts in the first place you'll be in a stronger bargaining position. Bottom line: if you don't ask, you'll never know!
Finally, buying a property in the pre-foreclosure phase allows you to avoid the "shark tank" of a foreclosure auction. You won't need to be worrying about trying to outbid another potential buyer in the fury of an auction. That's an entirely different set of skills to develop. Avoiding that environment allows you to concentrate on the sale without any distractions. Once the deal is closed, you can move onto the options to rent or flip, but at least you will have secured a property that will allow you to make those decisions.