Foreclosure Investing: What You Need to Know Before Jumping In

Foreclosure investing involves a lot more than picking up a
house for a below market price at an auction and then turning
around to sell it for an amazing profit. Foreclosure is a long
process, as is real estate, and both are bound by laws and tax
regulations that you need to follow. Before you invest in an
expensive how-to program or ebook, keep reading to learn the
basics of what you need to know for investing in foreclosure
properties.

Why Foreclosure Investing is a Good Buy

Because most banks are only looking to regain the value of the
home's unpaid mortgage, foreclosure investors can often obtain a
property for about 70 to 90 percent of its true market value.

And, thanks to today's still low interest rates, the cost of
carrying that property is low. This means if you can hang on to
a property for five to fifteen years you can actually double
your money, depending on the market. And if you have tenants
residing in the property, you can earn even more.

It Takes Capital

Typically, real estate isn't considered a quickie investment,
and your capital can be tied up for a long time. A down payment
on a home can't always be taken out and withdrawn in the case of
a financial emergency or the need for quick cash.

That capital could also be used for other investments. For
example, let's say you invest $20,000 into a home that winds up
not appreciating at the 8 percent annual rate you hoped it
would. Instead, it depreciates and then eventually appreciates
at a low 4 percent rate. That $20,000 could have made more by
investing it wisely in a diversified investment portfolio.

Ask For a Warranty Deed

Do your homework about potential tax liens or outstanding
building code violations on the property. A warranty deed will
ensure you're buying a property with a clear title.

Understand Redemption Period Laws

Many states have what's called a "redemption period" that
allows the previous owner to clear his or her debt and then take
back the home for a period of time that continues even after the
foreclosure is completed.

Buy a Vacant Home

Typically, the bank or lender will evict the previous tenants
before the house is sold at foreclosure auction. If, however,
you buy a home where the previous owners are still living in the
property, you will need to take on the long, arduous, expensive
and emotionally-taxing eviction process. It's hard and
unpleasant, so unless the opportunity is especially appealing,
look for a home that's already vacant.

Hire Professionals, Not Late Night TV Gurus

Don't spend your money on useless "how to" audio books and
videos that are little more than sales tools for another product
that claims to teach you how to do foreclosure investing.

Instead, commit your resources to a good real estate agent, a
quality real estate attorney and a recommended and thorough home
inspector. Most foreclosure investment homes are sold in what's
called "as is" condition, meaning the seller makes no guarantees
about the condition of the property. This is why you need a
fantastic home inspector to let you know if you're walking into
any major potential problems or expenses.

About The Author: For info on real estate locations, see
http://www.realestatelocale.com, a popular site about vacation
destinations, such as Whitefish Bay real estate-
http://www.realestatelocale.com/whitefish-bay-real-estate.shtml,
Lake Hartwell real estate-
http://www.realestatelocale.com/lake-hartwell-real-estate.shtml
and many more!

Please use the HTML version of this article at:
http://www.isnare.com/html.php?aid=264392