Preforeclosures:
How Fortunes Are Made
What
is preforeclosure?
Preforeclosure is the time period from which the bank
gives notice of default, once the homeowner is approximately 90 days
late in payments, to the time the house sells at auction. Preforeclosure
is also the most crucial time in the foreclosure process. It is during
this period that you as an investor stand to make the largest profits
and can literally make thousands of dollars in months, weeks, days,
or even hours!
The key to preforeclosure houses is equity. Simply put, equity is the
difference between what a house will sell for (fair market value) and
what is owed on the house. The whole concept to making money with preforeclosures
is to buy a house for less than fair market valuing, thus immediately
creating equity for yourself.
Here is an example of how this can work. Let's say someone owns a house
with a fair market value of $200,000. Now let's assume that this homeowner
has lived in the house for several years. If you consider that the property
has most likely increased in value over time, while at the same time
the homeowner has been paying down the mortgage on a monthly basis,
it is fair to assume they owe less than $200,000 on the property.
For this example let's assume that the homeowner owes $160,000. This
means there is $40,000 in equity in the house. As an investor, you would
want to buy the house for $160,000 or slightly higher. If you can do
this, you have a shot at making $40,000.
I know what you are thinking. Why would they sell the house for $40,000
under the market value? Right? Here is one reason why. If they sell
the house to you, you can promise them a quick closing, thus stopping
the foreclosure (losing the house at auction).
This will prevent a foreclosure from going on the homeowner's credit
record. A foreclosure can stay on someone's credit for seven to ten
years making it next to impossible to get another mortgage in the future.
This is just one of many reasons.
So let's say they sell the house to you for $160,000. You can turn around
and put the house back on the market for the $200,000 that it is worth.
Once the home sells, you could put a whopping $40,000 in your pocket.
Sounds pretty nice, huh? The best thing is there are ways to make similar
deals with little or no money! An that is an example of how you can
make money with preforeclosure houses.
In order to buy preforeclosure houses you first need preforeclosure
leads. This is how you are going to get your leads. You are going to
implement a powerful direct marketing campaign soliciting those who
are in preforeclosure. How do you learn where to start looking?
One of the most valuable sources for preforeclosure leads is mortgage
brokers. Almost everyone knows a mortgage broker. Maybe your brother
is a mortgage broker. Maybe a good friend is a mortgage broker.
If you don't know anyone in the mortgage business, network a little
bit. I am confident you will be introduced to someone in the mortgage
field that can help you.
If not, that is OK too! You will just have to do a little more legwork.
Go through the yellow pages and look for mortgage companies. Start calling
around and introducing yourself. See if you can talk to the manager.
If not ask to speak to a loan officer.
Ask them if they have someone in particular that handles foreclosure
financing. They may or may not. Often times in mortgage companies, they
will receive large volumes of calls from distressed homeowners.
These are homeowners who are trying everything to stop foreclosure.
Most of the time, it is too late for the mortgage company to help the
homeowner because their credit is already shot. At this point the mortgage
company may refer them to what is sometimes call a hard money lender.
A hard money lender is a lender that specializes in high risk loans.
Often times, they are private investors.
This is where you come in. These leads are invaluable. They are homeowners
that are exhausting their last options to save their home. What you
do is have the mortgage company start to refer these deals to you. If
you can get the names and phone numbers of these homeowners, you can
contact them directly. More importantly, you can contact them when they
are open to listening and expecting your call. If the mortgage representative
that can't help them gives a high recommendation of you to the homeowner,
they will be excited to hear from you.
About
The Author:
Jeffrey Ringold is the author of 'How
To Build A Massive Fortune Through Real Estate Foreclosures'. He
is a licensed real estate agent and investor who has bought or sold
over $12 million in real estate over his 7 year career. He is consulted
by leading real estate developers and investors almost daily.
For more information on real estate investing and foreclosures, visit
his web site at: http://www.MassiveForeclosureProfits.com
|
Popular Foreclosure & Real Estate Investing
related articles
How to purchase a home in foreclosure
Foreclosure listing ny free
Boise estate investment property real
Foreclosed home oklahoma
Arizona in investing property
Development foreclosure housing urban
Abc estate institute real training
Land property foreclosure sale houston texas
Government seized home for sale
Sample foreclosure notice
Investment property for sale miami
Investment property for sale
Repossessed mobile home tennessee
San diego foreclosure properties
Add foreclosure site
Nj home foreclosure
Alabama foreclosure mortgage
Wisconsin house foreclosure
Sues auction real estate
National real estate investor james smith
Auction estate hines real
Antonio estate real san
Real estate appraiser course
Estate free investing real tip
Bank owned reo
Second mortgage foreclosure
Estate inspection real training
Estate in investment real toronto
Free investing in real estate article
Austin foreclosure texas
Foreclosed government property
Turkish investment property
Fast foreclosure help
Illinois real estate auction
A mortgage after foreclosure
Auction estate real state washington
California law real estate foreclosure
Arizona auction estate real
Nyc foreclosure listing
Foreclosure suffolk county ny
Foreclosure home atlanta
Principal real estate investor
Estate investment jersey new real
Government repo home
Ca county foreclosure list oc orange
|
