Auctions Only Leave Room For The Investor To Make Poor Decisions

Category: Finance, Real Estate.

If you are thinking about investing in real estate, now is a good time to do it.

Homeowners are sliding into preforeclosure at an all time high and savvy real estate investors see this as a chance to obtain new property. With foreclosures on the rise, investors have a unique opportunity to cash in on a failing housing market. Preforeclosure is a term that refers to the period of time before foreclosure on a home begins. This means the bank has filed foreclosure papers, but the sale or auction of the home hasn t occurred. During this time, the homeowner is not making house payments as in default status on their home loan. With a fist full of hundred dollar bills and the right knowledge, the real estate investor can pick up the home at a substantial discount.

Preforeclosure is an opportune time for investors for several reasons. The following are a few inside tips that demonstrate the type of advantages investors have in a preforeclosure market. First, when a home is on its way to foreclosure, no one is making payments on the property. As always, investors should pursue highly motivated individuals who want to sell their property. This gives the investor leverage because he or she can essentially hold costs and use that weight to get a better deal on the home. A homeowner in preforeclosure with the bank hounding them constantly is undoubtedly a highly motivated seller. They need to liquidate loans gone bad because they don t want to actually repossess the property.

Lenders in this situation are like the homeowners. With that said, it is easy to see that large discounts can be negotiated. If you can negotiate a transaction during pre- foreclosure you avoid the stress of competing for a home in an auction environment. One of the main keys to successfully investing in a preforeclosure market is to get in and get out before the actual foreclosure and auction occur. Auctions only leave room for the investor to make poor decisions. Investors, who plan on purchasing and holding the property, generally need a little more money or credit to do so.

Preforeclosure deals keep the investor in control which is a good place be. However, during the preforeclosure market, the investor is essentially taking over where the homebuyer left off. To boot, the investor can benefit from the tax advantages the homeowner no longer qualifies for. The investor doesn t need to qualify for the home loan but instead can take over payments and not be personally liable for property. This is possible by taking the title to the property and putting it in a land trust. The savvy investor will not jump on every deal that comes across his path, the idea is, instead to develop and stick to an investing plan that will pay dividends down the road.

Finally, while a preforeclosure market can be exciting, it still requires the investor to be smart and focused with his or her investing decisions.