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Foreclosure and Short Sale Solutions — FAQs

How can foreclosure investing make me money?

As explained earlier, foreclosed properties sell way below their market value. Purchasing properties below value is a sure way to make money as the investor can resell at a much higher price. Landlords even buy and rent foreclosures, with positive cash flow, to accrue long-term wealth. It is possible to get a substantial amount of equity up front when purchasing a foreclosed property. Using our database to search for foreclosing properties is an excellent way to get started.

What kinds of foreclosure properties exist?

A typical foreclosure goes through three phases. In the pre-foreclosure phase, the lender will initiate a foreclosure due to a default of payments. If the borrower does not (or cannot) pay back what is owed, the property will be sold at a public auction (this auction is phase two). If the property is not sold at auction, the lender gets it back and it becomes a REO (Real Estate Owned). The exception to this process occurs if the loans happen to be insured by a federal agency such as HUD, Fannie Mae, or the Department of Veterans Affairs (VA). In this instance, the agencies will pay the lenders and take over the property, at which point they will prepare to sell it.

How do I purchase foreclosure properties?

During the pre-foreclosure stage it is possible to buy directly from the property owners before it goes to auction. You can also put in a bid for the property once it goes to auction. If the property becomes a REO, you can buy directly from the lender. However, if you are trying to purchase a government owned property, you will need a realtor. HUD, VA, and Fannie Mae, along with other federal agencies, sell through realtors. Their listings can be found in newspapers, on the Web, or with management companies. Some realtors work directly with federally owned properties.

How do I finance foreclosed properties?

Most banks and mortgage companies will finance these properties. Going the conventional route is very cost effective for those who have a good credit history as they often offer competitive rates and terms. You can also try to find partners who might be willing to go in on a deal with you. You’ll be surprised how many people are interested in real estate investing. Another option is contacting a hard money lender who specifically provides loans for real estate investments. You will still have to make monthly payments on the loan until you pay off the balance.

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