It is a familiar fact that we are finding a tremendous increase in foreclosures in the real estate market. These foreclosures are also fueling the abandoned housing market, which is an additional way to make money off of distressed properties. For several years, homebuyers have purchased homes and financed them through credit products such as adjustable-rate mortgages (ARMs), interest-only loans, and graduated payment mortgages.
Homebuyers with low or no down payments and poor credit scores were able to purchase a home as lenders had relaxed their underwriting principles, greatly contributing to the mortgage mess we find ourselves in. When low interest rates began to adjust higher and new bankruptcy rules came into effect, it became a recipe for catastrophe.
If you are or aspire to become a real estate investor, this is an opportunity to make a lot of profit, and there are many ways to do it!
Several Ways to Generate Cash with Foreclosures…
1. Ask the owner of the house if he wants to sell it.
You may be very surprised at the response you might get. Many homeowners are in a place to get away from the headache of their home. You may be able to make a splendid deal if you ask. Without having to go through the hassle of involving lenders, you may be able to invest in the property without delay with the owner. If the owner wants to get rid of the house, what prevents him from investing in it?
2. Try to persuade the lender to grant you a loan modification.
There are a lot of houses being repossessed by lenders these days, and about 80% of them go back to lenders after auctions because the houses don’t hold much equity. Due to the increase in the number of foreclosures, lenders would be more than willing to allow houses to be sold as soon as possible.
So if the owner of the foreclosed home wants to get rid of it, lenders will usually be hesitant to resume the foreclosure process. Many times they will offer a loan modification at the same time as a way to support the deal. A mortgage modification is made when the lender sees that the homeowner has sufficient wages and can afford the next month’s mortgage. The lender and the title holder at that time will work the funds to make it possible for the title holder to dispose of the home.
3. The famous short sale!
You may have come across landlords who would like to get rid of their home, but there isn’t enough or no equity in the home. Although there may not be any equity, you can still produce cash by doing a short sale. The lender will usually decide to generate a discount on the mortgage balance so that the owner can proceed to dispose of the home prior to the public foreclosure sale.
This is a very lucrative practice that can make huge profits. It helps to be infused with a spirit of teamwork, as you, the title holder, and the lender will be working together for mutual benefit. Your financial rewards can be impressive when using a short sale!
4. Contact the lender and ask if they would sell you the mortgage.
From time to time you will discover repossessed owners who, for whatever reason, can be completely unreasonable and difficult. They are losing their home to foreclosure, but are not choosing to sell. Since they refuse to cooperate with you on a mortgage modification or short sale, your best course of action is to negotiate directly with the lender.
Contact the lender and ask if they would consider selling you the mortgage on the foreclosed home. You may find that the lender will be happy to give you a mortgage, maybe even at a reduced rate! In most cases, the lender will accept his offer so they don’t have to repossess the home.
5. Get to the public sale and bid on it.
There are usually a number of very nice bargains you can find at foreclosure auctions. Take some time and educate yourself about the foreclosure public sale bidding process. It can be very worth your time. When you go to see a good residence to invest, bid on it. Be careful not to send houses that don’t contain equity and complete your research so you don’t overbid.
There may be a downside to bidding on a home at public auction. You will not be able to inspect the residence as you would like. You can simply fix your eyes on the outside. You will not be able to assess the home in this set of circumstances. Take time and understand this process so you don’t make costly mistakes.
6. Contact the lender beyond the public sale and make an offer.
We don’t like to offer homes at foreclosure public sale that have no equity value, but we’re not going to ignore them completely either. If you keep an eye out for investments coming back to the lender since there were no offers, you may be able to get them at that time. Since lenders are required by law to set aside 4-8 times the mortgage amount when they repossess a foreclosed property, they may immediately roll out the red carpet to support you and your offer.
7. Network with other foreclosure investors.
Nearby are other real estate investors currently selling wholesale investment properties that I have never seen. I think it’s because of the sheer number of potential deals that exist in our market right now. There is usually no problem when two investors decide to work together on a wholesale transaction.
8. Liquidation cases can make cash.
Most of us know that the owner of a foreclosed property can stall the deal by filing for bankruptcy. While bankruptcy could stop the foreclosure agreement, that property can go back into the foreclosure process once the bankruptcy is lifted. Be sure to keep track of settlement cases, as homeowners may come to you for help once foreclosure begins again.
9. Hidden profits. The “hidden market” within foreclosures.
The ninth way to profit from foreclosures is in the field of hidden foreclosure market. The hidden foreclosure market consists of investments that could be heading to the foreclosure pit, but foreclosure notices have yet to be posted. This is a splendid opportunity as there are no yard sale signs or newspaper ads. No one knows about these properties yet, which drastically reduces competition.
There are plenty of opportunities to make a lot of cash in the hidden foreclosure market. To take advantage of this lucrative foreclosure market, you must maintain sound procedure and discipline. The discipline has to come from you, but I can provide the system. Click below to find out how to skyrocket to big wins.
I’ll see you at the top!