If you are new to real estate investing and considering buying foreclosure properties, you need to be realistic about what you are facing. If you feel more sober about foreclosure investing after reading what I have written below, I will have accomplished my goal.
Foreclosure investing is not a good investment approach for beginners. I recommend that you have at least a couple of years’ experience with more traditional real estate investing first.
The profits from foreclosure investing can be huge. That makes foreclosures attractive. There is an awful lot to know in order to avoid the problems that can occur. If you don’t know what you are doing, one disastrous foreclosure investment can wipe out your capital and your enthusiasm for all real estate investing.
Three ways to buy a foreclosure property
There are three basic approaches to buying properties in foreclosure depending on the stage of the foreclosure process: buying pre-foreclosures, buying at the foreclosure auction, and buying from lender after the foreclosure sale.
If you buy from the delinquent property owner before it goes to auction, you have bought a pre-foreclosure deal. Buying at the auction is self-explanatory. If nobody bids, the lender ends up with the property.
Buying from the lender after the auction is called buying REOs