If you are wondering whether there are profits to be made with foreclosures, the answer is still positive. With more than one million homes expected to go into foreclosure in 2010, there are still plenty of profit opportunities, and there are more to come. Owners will default, lenders will foreclose, and more properties will come into a market that is already replete with foreclosures.
However, you should not get into the foreclosure market thinking that you are going to get rich overnight. You are going to have to spend time doing research, going to the county courthouse, and studying foreclosure law to make sure that you avoid some of the pitfalls that snag first-time investors.
You should also not get into foreclosures thinking that mortgage lenders are just going to throw properties into your lap. As a general rule, lenders are going to try to get what they can for any foreclosure, even if they want to get rid of the home as quickly as possible, meaning that it will not be given away. There are still instances where you will find lenders selling properties for pennies on the dollar, or selling them for back maintenance, but this is definitely not the rule in the market.
If you want to find out what it is like, then you should plan on attending at least one Trustee Sale, which takes place at the county courthouse. You can find out what it is like, what is available, and how to take part in it. This is where doing your research comes in because you are going to want to know whether the title to the home is free and clear, where the property is located, and what other comparable homes in the area are going for.
You should find out whether the title is clear so that you do not get stuck with any bad debts, liens, etc., since you are going to be the one who ends up paying for it if the title is not clear. You want to know what other comparable homes in the area are going for because you should not overbid for a property if you want to make a profit.
The idea is to buy and flip the property as quickly as possible for as much of a profit as possible. However, if you cannot sell the property as quickly as you would like, you should have enough cash reserves on hand to maintain the house and to pay off any debts you may have incurred in order to get enough cash to buy the property.
If you fall in love with a property and allow emotions to override your good sense, you are going to lose money. Getting attached to a property is a sure-fire way to lose rather than make money on a foreclosure investment. After all, keep in mind that it is an investment, and that other properties are going to come and go as you become more familiar with how things work. The more experienced you become, the better you will be at auction, and the better you will be at flipping properties for a profit.
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