The reality of foreclosure investing is very different from what people have been led to believe through late night infomercials and the hundreds of books written on the subject. Always remember these two key facts when dealing in foreclosures.
• Every active foreclosure investor works a lot more than people working 9-5 jobs.
• Serious foreclosure investors either have large sums of money of their own or have another investor backing them up.
Finding a solid foreclosure property to purchase is not a matter of choosing what you want, it is a matter of finding something that works economically, keeping track of it, researching it, and then beating out all the other investors who are interested in it.
People treating this business seriously invest a lot of time and energy into finding and following leads.
So, is it possible to make money in this business?
Absolutely, but you must know your strengths and weaknesses.
One of the major problems most beginning investors have, is knowing the market value of a property they are interested in. Experienced investors will have their properties valued to within a 3% variance all the time. All decisions regarding a property are based on the price it will receive. In other words Know The Market Value. Experienced foreclosure investors will use The Multiple Listing Service, Title Companies and their own experience to arrive at that value.
The second problem is the law. You don’t want to run into legal issues because you’ve structured a deal that is illegal in your state. States do have laws regarding what you can and cannot do with owners who are defaulting on their home loans. So again, do your research.
The third problem is the problem of money. If you’ve got a good amount to back your purchases, that’s great. But even if you don’t, it is still possible to do the deals. However, you do need enough to be able to find properties, keep track of them and cover your on going expenses.
The fourth problem is that of knowledge. Federal tax liens, partial interests, leased land, incorrect property information, unpaid property taxes and wrong common descriptions are all things that hurt investors. If you don’t know how to check for these things, you should not be investing in foreclosures.
If you don’t know how to follow up on real property information, you need to spend some time acquiring the knowledge necessary to complete these tasks. Take a course, read, make contacts and talk to people involved in the business. You can easily find them at local Trustee or Sheriff’s sales.
Successful Creative Real Estate Financing, as in life, depends not on what happens, but on what you do. The key to your future is what you do with what you have, because life gets better not by chance but by change. It only gets better for you, when you get better.
Many people are impressed with the many creative ways there are to make money in real estate, but don’t have any money to get started. It really is simpler than you might think. Notice, that I said simpler, not easier. Ideas don’t work unless you do.
Learn one creative financing formula very, very well and keep using it. “Do what you do best.” Find one formula that you understand, are comfortable with and like to work with. Get good at it. Then, get better. Remember this: “perfect practice makes perfect.” When you have one success, reinforce it with another. When you miss, analyze and correct your mistake and do better the next time. Keep refining your formula until no one else can implement it as well as you do. Success is no accident: it takes commitment.
“If you think you can win, you can win.” – William Hazlitt
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