How to Cash In on Foreclosures

When foreclosure rates are high, there can be a gold mine in the foreclosure industry for those who have the knowledge and the means to pursue these opportunities.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Mortgage lender
• Realtor
• Contractors
• Notebook

1. Determine what you want to do with the foreclosure. Do you want to purchase them to fix up and resell? Do you want to purchase them for rental property? Perhaps you even just want to buy one for yourself? Having a clear goal in mind will help you make the best decision on a property.

2. Choose your areas carefully. If the area shows no signs of improving any time soon, keep that in mind when looking to buy a foreclosure, as it can impact your earnings down the line.

3. Secure a financing or purchasing method. Do you have the cash to spend to buy a home? If you are able to obtain 100 percent financing, do you have the money to do the repairs needed? There are specific loans out there for fixing up homes, but you must do your homework to find a good mortgage broker.

4. Start looking. Foreclosures can be found through Sheriffs' auctions put on in the county or through a realtor who has access to the foreclosures that are now owned by the bank. Sheriff sales generally begin bidding at two-thirds of the appraised price, but 90 percent of the time the lender sends a representative to buy the home back, making it very difficult to purchase a home at these auctions.

5. Make an offer. If you are looking to fix up the home for resale, the rule of thumb is to spend no more than 65 percent of the ARV (After Repair Value). For example, if the home is worth $100,000 once fixed up, and it will require $15,000 in repairs, the most you should spend on it would be $50,000 ($50,000 + $15,000 = $65,000, which is 65 percent of $100,000). If you will be renting the home out, make sure you will get enough rent out of it to cover any mortgage payment, property taxes and insurance payments.

6. Close on the home. Once you close, you will get keys and access to the property. Your real work can begin! For investors fixing up the home for resale, time is just as important as budget. Holding costs on a home can eat away at your profits very quickly.

Tips & Warnings

• Keep a notebook of the homes you look at and repairs needed at each.
• Take a contractor with you to get good estimates of the work needed.
• Don't get emotional about a house- make sure you do not over-spend!

[sarahsoldit]

on 5/27/2009 The time is right! Great opportunities to purchase properties in Northern California! If you're ready to invest, contact us today! Hundreds of short sales and foreclosures. Email us today at [e-mail] or visit our website at http://www.topspaces.com