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JohnHanlin.com
Buying Foreclosures
Before Buying Foreclosures
Before you consider a foreclosure property investment, it is very important to understand the legal foreclosure process and the terminologies involved. For an easy-to-understand summary please read my webpage on the foreclosure process.
Next, when buying foreclosures, before you start searching for foreclosure properties to invest in, you need to first get your financing in order. In other words, you need to figure out:
a. How you are going to finance the investment.
b. How much house you can afford.
Also, you need to have the money readily available for a fast transaction when you find foreclosure properties that you want to invest in.
Next, you need to determine the foreclosure properties characteristics that you would consider:
* Location: state, city, zip code, neighborhood
* Property type: single family residence, condo, duplex, multi-family apartment building, etc.
* Number of bedrooms, baths, etc.
* 'Fixer upper' vs. 'turn key': how much work & additional money do you want to put into your foreclosure properties?
* Price range
* Profit margin: how much money do you want to make on your investment?
How to Find Foreclosure Properties
Having the property characteristics predetermined will make your home search much more efficient. And, having your financing already in place, you are well on your way to begin searching for and buying foreclosures.
If you read my webpage on the foreclosure process as suggested above, you probably know now that there are three opportunities for buying foreclosures related to the foreclosure process:
1. During the "Reinstatement Waiting Period".
2. At the "Trustee's Sale" (aka "Sheriff's Sale") - which is an auction.
3. From the banks as an "REO Property" (repossessed property).
Distressed Properties:
In addition, there are two other situations where you can find excellent investment opportunities that can also help out homeowners on the brink of foreclosure and financial ruin:
4. Properties soon to enter the legal foreclosure process due to payment defaults.
5. Properties with mortgage balances greater than the market value of the home.
So, there are really five investments opportunities related to buying foreclosures.
"The challenge is finding foreclosure properties in one of these situations that matches the property characteristics that you have predetermined."
It is relatively easy to find information about foreclosure properties going through the stages of the foreclosure process (#1 & #2 above). During the foreclosure process, various "legal notices" are filed into the public records with the County Recorder's Office and also published in local newspapers.
The most efficient way to find foreclosure properties in the various stages of foreclosure is to visit the County Recorder's Office and search through the public records. This is usually free and the records are available to anyone. The downside is that it can be very time consuming. But, it is time well spent, considering that you are "sifting for diamonds".
Of the 3,000+ counties in the United States, only a few have their public records available via the internet. So, you will most likely have to visit the County Recorder's Offices in person to conduct your search. Some have their records computerized, but most do not, which can make the search for foreclosure properties very tedious. Plan on spending a lot of long days in these offices.
Basically, the only information that you will obtain from the public record of notices about foreclosure properties is an address for the property. So, this is really just the beginning of your search for buying foreclosures.
Finding "distressed properties" (#4 & #5 above) that have not yet entered the legal foreclosure process is not as easy. But, there are several ways to find them:
* Local newspapers & other publications: look in the classified and real estate sections for advertisements with terms like "must sell", "motivated seller", etc.
* Drive-bys: look for "FSBO" signs (For Sale By Owner) and start knocking on doors.
* Real estate agents/brokers: leverage their local knowledge and access to the MLS (Multiple Listing Service) that itemizes all local properties listed for sale - except FSBO's
.
REO properties are homes that have completed the foreclosure process, did not sell at the foreclosure auction and ultimately reverted to become the property of the banks and other lenders (# 3 above).
Using the Internet to Find "REO Properties":
A number of banks and other lenders provide access to their REO properties on their websites that you can review in your search for buying foreclosure properties. Some are very user friendly and allow you to search using various property characteristics.
Asset Management Companies:
These entities work for the banks by marketing their REO properties. Their role is to find buyers and help the banks liquidate their inventory of REO properties.
(Banks do not want to own REO properties. Holding these homes ties up their capital and reduces the amount of money that they can lend, which is their livelihood.)
Asset management companies, like some banks, will typically have websites posting bank REO properties that you can review in your search process when buying foreclosure properties.
Property Listing Services:
There are many companies on the internet offering lists of both foreclosures and REO properties for sale. However, there are a lot of scams out there, so you never really know how accurate the information you are buying really is.
Real Estate Investment Clubs:
Most communities have organizations or clubs formed by investors and real estate professionals. These can be great resources for developing relationships and providing good leads for buying foreclosures and REO properties.
Real Estate Professionals:
Real estate agents and brokers can be invaluable resources for both foreclosure properties and REO properties because of their local knowledge, access to homes via "lock-box entry" privileges and Multiple Listing Service access.
REO Companies:
This is how I personally invest in foreclosure property investments and, in my opinion, is the best method for buying foreclosures. These entities are actually "investment companies" that specialize in buying foreclosures and REO properties. They purchase these homes from the banks and other lenders with the intention of renovating and reselling them very quickly at a profit for their investors.
To learn how REO companies operate CLICK HERE
U.S. Government-Owned Homes:
Another resource for finding REO properties is government-owned homes. You can bid on properties owned by various government agencies including: HUD, VA, U.S. Marshal Service, Dept. of the Treasury, IRS, Fannie Mae and Freddie Mac.
NOTES:
As you now know, there are numerous resources that you can use to find foreclosure properties and REO properties for investment. In fact, it can be overwhelming. The key to buying foreclosures is sticking to the property characteristics that you predetermined at the start of this process. (Especially price range and desired profit margin.)
Want to know how & where I invest in Foreclosures?
Get a copy of my "7-Step Retirement Investments Planning Guide"
Get a copy of my "7-Step Retirement Investments Planning Guide"
How to Find "REO Properties
REO properties are homes that have completed the foreclosure process, did not sell at the foreclosure auction and ultimately reverted to become the property of the banks and other lenders (# 3 above).
Using the Internet to Find "REO Properties":
A number of banks and other lenders provide access to their REO properties on their websites that you can review in your search for buying foreclosure properties. Some are very user friendly and allow you to search using various property characteristics.
Asset Management Companies:
These entities work for the banks by marketing their REO properties. Their role is to find buyers and help the banks liquidate their inventory of REO properties.
(Banks do not want to own REO properties. Holding these homes ties up their capital and reduces the amount of money that they can lend, which is their livelihood.)
Asset management companies, like some banks, will typically have websites posting bank REO properties that you can review in your search process when buying foreclosure properties.
Property Listing Services:
There are many companies on the internet offering lists of both foreclosures and REO properties for sale. However, there are a lot of scams out there, so you never really know how accurate the information you are buying really is.
Real Estate Investment Clubs:
Most communities have organizations or clubs formed by investors and real estate professionals. These can be great resources for developing relationships and providing good leads for buying foreclosures and REO properties.
Real Estate Professionals:
Real estate agents and brokers can be invaluable resources for both foreclosure properties and REO properties because of their local knowledge, access to homes via "lock-box entry" privileges and Multiple Listing Service access.
REO Companies:
This is how I personally invest in foreclosure property investments and, in my opinion, is the best method for buying foreclosures. These entities are actually "investment companies" that specialize in buying foreclosures and REO properties. They purchase these homes from the banks and other lenders with the intention of renovating and reselling them very quickly at a profit for their investors.
To learn how REO companies operate CLICK HERE
U.S. Government-Owned Homes:
Another resource for finding REO properties is government-owned homes. You can bid on properties owned by various government agencies including: HUD, VA, U.S. Marshal Service, Dept. of the Treasury, IRS, Fannie Mae and Freddie Mac.
NOTES:
As you now know, there are numerous resources that you can use to find foreclosure properties and REO properties for investment. In fact, it can be overwhelming. The key to buying foreclosures is sticking to the property characteristics that you predetermined at the start of this process. (Especially price range and desired profit margin.)
Want to know where I invest in Foreclosures?
Get a copy of my "7-Step Retirement Investments Planning Guide"
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Get a copy of my "7-Step Retirement Investments Planning Guide"
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Buying Foreclosures
