myEmpirePROIn this lesson, you will discover 5 proven ways to buy a foreclosure house in order to create instant equity in real estate.
When I first fell in love with real estate in 2004, I thought I was going to become a millionaire being a landlord.
I made the whole plan in my mind on how I was going to simply use other people’s money through the bank to buy and rent.
After digging a little deeper (thank goodness), I discovered foreclosure and 5 ways I could buy the same houses without paying full price.
I discovered foreclosure, pre-foreclosure, everything in between and after.
My name is OLA and I am the author of the 2 books
Smart Real Estate Wholesaling… And
Real Estate Money Secrets…
…which you can download for free at www.SmartRealEstateWholesaling.com
So let’s dive right in…
#1 – Pre-Foreclosures
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Foreclosure is the legal process that a lender goes through to take over a collateral property when the owner defaults on the loan.
But long before that happens in most states, mortgage loan payment as agreed upon in the promissory note has stopped due to hardship.
Shortly after the monthly payment stops, the bank files a lis pendis or an intention to foreclose with the courts.
That’s when preforeclosures starts.
And that represents the beginning of the opportunity to leverage the reality of foreclosure to build a real estate empire.
The idea at this point is not to take advantage of people’s hardships.
On the contrary, it’s an opportunity to help a real person offload a liability and you get the opportunity to help them.
Then, you also simultaneously get the opportunity to pick up a property at 40-70 cents on the dollar.
All of these happen before the house gets foreclosed; while is it still owned by the present owner.
#2 – Foreclosures
Once a property has fully gone through the process of foreclosure and exhausted the gazillion collection activities, the authorities will then schedule it for a public auction.
That public auction of the property can present a fantastic opportunity to pick up a property cheaply.
On the flip side, it can become the worst decision of a person’s life especially if they don’t have any experience in vetting properties.
A lot can be wrong with a property structurally without being able to detect it by just looking at it.
One of the disadvantages of buying a house from a foreclosure auction is the fact that you are not allowed to inspect the property.
In fact, that’s considered trespassing in a lot of locations around the nation.
But some people still go look around the house at their own risk.
The bank never wants to get in the business of acquiring properties but they find themselves in it.
What does that mean for you?
It means the banks or lenders can’t wait to get rid of these properties, get as much as they can and move on.
To learn more detail on finding these deals, go ahead and download my 2 books…
SMART REAL ESTATE WHOLESALING and
REAL ESTATE MONEY SECRETS
for free at: www.SmartRealEstateWholesaling.com
For a quick start guide, go to www.11DaysChallenge.com to set up a lead pipeline in 11 days.
#3 – Real Estate Owned By Banks (REO)
TRENDING: HOW DO YOU BUY A FORECLOSED HOME IN NEW JERSEY
The banks owning real estate is their worst nightmare because they are primarily in the business of flipping money for more money.
Owning and managing properties is a different ballgame and type of business all together.
So how come are they acquiring these properties?
A lot of these properties do not get sold at the auction for the same reasons I highlighted earlier.
It can be highly risky because they cannot be inspected.
In fact, the present owner(s) and/or their tenants still occupy a lot of these properties.
Nonetheless, the bank still wants some of that money back in spite of knowing that it is highly unlikely for them to get most of it back.
Their best chance of getting that money back is to buy the property back through the government foreclosure sheriff.
After that, they then evaluate it with respect to the present market by performing a broker’s price opinion.
And then they list it with a licensed real estate agent for sale.
At this point, it is called real estate owned by the bank or REO for short.
In the next video, I will share about how to partner with your local real estate agents to find deals from REOs.
#4 – Shortsale
This takes us back to the first way of buying real estate from foreclosure; pre-foreclosures.
We kind of assumed that the home owned is owing so little to just tell the bank to go away by giving them the cash.
But what happens if they are owing much more than the property is worth?
In that case, a shortsale will be negotiated with the bank with the consent of the homeowner.
A shortsale is a short or discounted payoff.
A payoff that shows the total owed by an owner to a bank is pulled when a typical ownership transfer occurs.
This is how their previous banks get paid the amount owed to them.
But when they owe too much to attract any buyer that will pay off a previous mortgage balance, a short sale negotiation is then necessary.
The bank usually agrees to it because taking the property from them would effectively mean accepting property management responsibility
And potentially having to accept less money when they do get to sell the property.
Remember that the bank is not in the business of property management.
So shortsale is another fantastic opportunity to pick up a cheap property on its way to hit the foreclosure shelf.
#5 – Subject-To
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On this method, the homeowner may be facing foreclosure but they are motivated enough to let you come to take over their payments.
Why would you do that?
The value is only available in this method if it is economically feasible to put the property to work and collect cash flow much more than the expenses associated with owning it.
But subject to deals can be highly lucrative.
Conclusion & Main Lesson
As you probably know, the opportunities available with real estate are endless.
But if you are looking for a more narrow niche for real estate investing opportunities, look no further.
Foreclosures present an opportunity to add value to real people while acquiring cheap properties.
You can even build a real business out of this even if you don’t have capital or good credit by mastering marketing to find deals.
That’s when this whole thing gets really sexy and lucrative.