Are there really opportunities in the foreclosure market, if so what's the best way to go about finding them?
Best Answer
4085 points
EthanR answered one year ago …
I have to disagree with parts of the above answer. Plenty of good deals are out there and not every investor on the planet is swooping down on them. And even if they are, why can't you be one of them too? Anyway, these are the best suggestions that I can give you:
1) Find a good Realtor in whatever area you decide you want to invest in. This means one who has lots of experience in working with investors on selling HUD, VA, and bank foreclosures.
2) Forget about short sales, they are a joke. You will wait three months for an answer and in the meantime everyone else can throw in bids on the same property.
3) Do not waste your time knocking on doors of distressed property owners. In this market that is unnecessary and no different than trying to work short sales.
4) Cash is king to buy, but if you don't have cash, make sure you have 20% down and good enough credit for a conventional loan. That will probably mean a FICO of 720 or better.
5) There are several good web sites that you can use to find out information on any area of the country. One is www.trulia.com, a second one is www.bidselect.com, and another is www.realtor.com On trulia they often will list the homes from realty trac that are still in lis pendens status. You don't want those. Stick with the bank foreclosures. Bid select will show you HUD foreclosures and bank ones as well. You can not buy a HUD foreclosure as an investor until it has gone through the first ten day period and nobody has bought it as a primary residence.
6) If you will be using a mortgage, get yourself pre-qualified with a mortgage broker FIRST before you go out looking for homes. Qualifying is tougher than it was a year ago, and you don't want to waste your time looking, only to discover that you can't get a loan.
7) Do an internet search to see if there are any local investment clubs in your area. If there aren't, consider placing an ad in the paper or on craigs list to start one.
8) I have written several articles in Thetcyoonreport.com on this subject already (see links below) and will have another one on a house I just bought next Friday.
http://tycoonreport.tycoonresearch.com/articles/457509948/how-to-earn-a--r eturn-in-one-year
http://tycoonreport.tycoonresearch.com/articles/216198086/is-the-next-grea t-bull-market-for-rent
http://tycoonreport.tycoonresearch.com/articles/577236083/would-you-journe y--miles-to-buy-investment-real-estate
Good luck!
Answers
474 points
spider348 answered one year ago …
Yes there are opportunities. Problem is, every RE investor on the planet is swooping in on the best deals. The bulk of these bad loans were made in the last few years which means there is no equity in most of the properties. You can direct market to the distressed property owner - mailings, phone calls. If you find an owner that is willing to discuss your purchase of the property you will most likely have to work with the owner to secure a short sale - which is typically not fast or easy. Best approach is to target properties with second mortgages and try to short sale the second, because that lender will lose that equity if it forecloses. So there is some motivation to deal. Or you can buy them at the foreclosure auction. Problem with auctions is the properties are typically priced to cover the loan, which would be too much. Not to mention you will have to have funds the day of the auction. Lastly you could wait until the lender buys them back at auction (it is now an REO). Then you can shop the lenders and the brokers they use. By this stage many properties will be discounted because the lender does not want to hold any longer. The longer the property sits on the market, the better the chance you have of striking a great bargain. There should be brokers in your area that specialize in just lender owned (REO) properties. Also by this stage in the game, second mortgages have dropped off.
Read more from spider348474 points
spider348 answered one year ago …
Clarification: Well, yes EthanR is correct, there are good deals to be had - As the founder of a RE investment company that specializes in buying and cash flowing residential properties, I was speaking from my very specific parameters which make my target properties extremely competitive to obtain and I am also in an locale where real estate has held up fairly well (relatively). I should have qualified that in my previous response.
Another tip - join a local real estate club (or many). You can network with like minded folks, and make necessary connections. Successful RE investing is a 'team sport'. From this you can find wholesalers with private deals, private 'hard money' for financing, REO brokers, RE attorneys, contractors, etc.
