How to Find REO Properties & Foreclosure Properties for Investment

REO properties and foreclosure properties present us with perhaps the greatest wealth building opportunities of our generation.

Things You'll Need

• Money to invest

Instructions

1. 

   The first step in finding REO properties & foreclosure properties is all about preparation. And before you consider a foreclosure property investment, it is very important to understand the legal foreclosure process and the terminologies involved.

   For an easy-to-understand explanation, click on the link in the Resource Section below titled: "The Foreclosure Process"

2. 

   Next, before you start searching for REO properties & foreclosure properties to invest in, you need to first get your financing in order. In other words, you need to figure out:

   a. How you are going to finance the investment.
   b. How much house you can afford.

   Also, you need to have the money readily available for a fast transaction when you find REO properties or foreclosure properties that you want to invest in.

3. 

   Next, you need to determine the property characteristics that you would consider:

   * Location: state, city, zip code, neighborhood
   * Property type: single family residence, condo, duplex, multi-family apartment building, etc.
   * Number of bedrooms, baths, etc.
   * Fixer upper or turn key?: how much work & additional money do you want to put into a foreclosure property?
   * Price range
   * Profit margin: how much money do you want to make on your investment?

   Having the property characteristics predetermined will make your home search much more efficient. And, having your financing already in place, you are well on your way to begin searching for and buying REO properties and foreclosure properties.

4. If you clicked on the link ("The Foreclosure Process") as suggested in Step 1, you should realilze now that there are three opportunities for buying REO properties and foreclosure properties related to the foreclosure process:

   1. During the "Reinstatement Waiting Period".
   2. At the "Trustee's Sale" (aka "Sheriff's Sale") - which is an auction.
   3. From the banks as "REO Properties" (repossessed property).

   DISTRESSED PROPERTIES:

   In addition, there are two other situations where you can find excellent investment opportunities that can also help out homeowners on the brink of foreclosure and financial ruin:

   4. Properties soon to enter the legal foreclosure process due to payment defaults.
   5. Properties with mortgage balances greater than the market value of the home.

   So, there are really five investments opportunities related to foreclosures and REO properties. The challenge is finding a property in one of these situations that matches the property characteristics that you have predetermined.

5. It is relatively easy to find information about homes that are going through the stages of the foreclosure process. (See #1 & #2 in Step 4 above). During the process, various "legal notices" are filed into the public records with the County Recorder's Office and also published in local newspapers.

   The most efficient way to find properties in the various stages of foreclosure is to visit the County Recorder's Office and search through the public records. This is usually free and the records are available to anyone. The downside is that it can be very time consuming. But, it is time well spent, considering that you are "sifting for diamonds".

   Of the 3,000+ counties in the United States, only a few have their public records available via the internet. So, you will most likely have to visit the County Recorder's Offices in person to conduct your search. Some have their records computerized, but most do not, which can make the search for foreclosure properties very tedious. Plan on spending a lot of long days in these offices.

   Basically, the only information that you will obtain from the public record of notices about foreclosure properties is an address for the property. So, this is really just the beginning of your search for buying foreclosures.

6. Finding "distressed properties" (See #4 & #5 in Step 4 above) that have not yet entered the foreclosure process is not as easy. But, there are several ways to find them:

   * Local newspapers & other publications: look in the classified and real estate sections for advertisements with terms like "must sell", "motivated seller", etc.

   * Drive-bys: look for "FSBO" signs (For Sale By Owner) and start knocking on doors.

   * Real estate agents/brokers: leverage their local knowledge and access to the MLS (Multiple Listing Service) that itemizes all local properties listed for sale (except FSBO's which are not listed on MLS).

7. 

   REO properties are homes that have completed the foreclosure process, did not sell at the foreclosure auction and ultimately reverted to become the property of the banks and other lenders. (See #3 in Step 4 above).

   Using the Internet to Find "REO Properties":

   A number of banks and other lenders provide access to their REO properties on their websites that you can review in your search for buying foreclosure properties. Some are very user friendly and allow you to search using various property characteristics.

   Asset Management Companies:

   These entities work for the banks by marketing their REO properties. Their role is to find buyers and help the banks liquidate their inventory of REOs.

   (Banks do not want to own REO properties. Holding these homes ties up their capital and reduces the amount of money that they can lend, which is their livelihood.)

   Asset management companies, like some banks, will typically have websites posting bank REO properties that you can review in your search process when buying foreclosure properties.

   Property Listing Services:

   There are many companies on the internet offering lists of both foreclosures and REO properties for sale. However, there are a lot of scams out there, so you never really know how accurate the information you are buying really is.

   Real Estate Investment Clubs:

   Most communities have organizations or clubs formed by investors and real estate professionals. These can be great resources for developing relationships and providing good leads for buying foreclosures and REO properties.

   Real Estate Professionals:

   Real estate agents and brokers can be invaluable resources for both foreclosure and REO properties because of their local knowledge, access to homes via "lock-box entry" privileges and Multiple Listing Service access.

   REO Companies:

   This is how I personally invest in foreclosure property investments and, in my opinion, is the best method for buying foreclosures. These entities are actually "investment companies" that specialize in buying foreclosures and REO properties. They purchase these homes from the banks and other lenders with the intention of renovating and reselling them very quickly at a profit for their investors. To learn how REO companies operate click the link in the Resource Section below titled: "REO companies"

   U.S. Government-Owned Homes:

   You can bid on properties owned by various government agencies.

8. 

   There you have it!

   If you would like to learn more about foreclosure property investments including what happens after you find REO properties or foreclosure properties that interest you. (Including how to conduct due diligence on the home, how much to determine to offer for the home, how to rehab the property, how to sell the property and how to price it for sale, etc.)

   I suggest reading "The LazyMan's Guide to Understanding Foreclosure & REO Property Investments". Click on the link in the Resource Section titled "LazyMan's Guide to Foreclosure"

Resources

• The Foreclosure Process
• REO Companies
• LazyMan's Guide to Foreclosure