Time to Buy a Foreclosure
Source: Adam Smith - United States
So you want to be a major player in the real estate market just like Donald Trump? Maybe you are not good enough to be Donald's apprentice just yet, but you have to start somewhere - even the Donald wasn't born rich.
As you have observed the real estate world around you, most likely you have considered many different types of investment properties that will return a positive cash flow. Obviously you are in this game to make some money, so a positive cash flow is very important. When looking for the right investment property, many people think the way to go is an apartment complex. Others might praise owning and operating retail spaces, while still others would suggest investing in office spaces. All of these would make a great investment property, but are they realistic? Probably not, especially if you are just starting out and trying to get your foot in the door.
Taking Advantage: Buy a Foreclosure
To get into real estate investing you need to start small. Buying a foreclosure is a great place to begin. In today's market, people are filing for bankruptcy right and left. Bankruptcy is admittance that you cannot meet your financial obligations and that you require assistance to get out from under these financial burdens. When an individual cannot meet the monthly mortgage payments demanded by the bank servicing the mortgage loan, the bank will have to foreclose on the home. The ensuing foreclosure is simply another term for selling the house. In this case, it is the bank that is selling the house and will be the benefactor of the funds raised through the sale of the house. Buying a foreclosure is an enticing investment property because typically when a bank forecloses on a home it will offer the house for sale at a substantially reduced price compared to its market value. If you can find a good foreclosure to buy, you will be able to purchase an investment property well below the market value.
You can then take your foreclosed home, put it on the market as a rental and start producing positive cash flows. Since you acquired the house through buying a foreclosure, the mortgage loan you take out on the house should be relatively low, meaning your monthly payments for the newest piece in your investment portfolio will be relatively low. After you have touched up the house, you can put it up for rent. Be sure to charge a competitive rental rate, as this is how you will cover your monthly mortgage rate as well as other expenses that arise related to the property. The money that is left over after you pay your expenses is your net cash flow. After you have acquired a substantial nest egg of savings from your positive cash flow , you can continue your investment property adventures by seeking out the next foreclosure that interests you.
It may take some time to build up your investment property portfolio and increase your cash flow all the while, but little by little your will improve your position and become a player that must be reckoned with in the real estate market. As you gain experience with the foreclosure process, you will find better and better deals. Once you have mastered the art of the buying a foreclosed home, you can begin looking for bigger deals like apartment complexes and office buildings.
Adam Smith is an internet marketer specializing in affiliate program management for 10Xmarketing.com. More information on how to buy a foreclosure can be found at the One Minute Millionare
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