How To Make A Killing In The Foreclosure Age As An Investor, Without Investing In Real Estate
Many speculators have made loads of money over the last 3 years using foreclosure properties. But they've either taken on a great amount of risk or they've worked very hard to make their fortunes. As always, there are a few who got lucky and were in the right place at the right time, but as a rule, foreclosure investing is either a big risk or it takes a considerable amount of labor.
When it comes to investing in foreclosure real estate, with all of todays problems, it's necessary for someone else to take a loss in order for an investor to take a profit. In most cases, it's the seller who ends up taking that loss. Some buyers think they are doing the seller a favor when buying their home, but the truth is, unless they are paying near the market value, it's unfair to the homeowner. This is such a problem in some states that they've made laws against investors purchasing a home in foreclosure and then quickly selling it for a profit.
Quite a few real estate investors have also lost everything they own by getting into the market at the wrong time. Prominent individuals, developers, and corporations have all lost millions due to wrong speculation in the real estate market. With the economy in the shape it's in today and the government printing and giving away money that it will never have, it's just a matter of time until there is a complete financial meltdown. Expecting a property value to increase is just reliable these days.
For example, a private investor I know in Toledo found 20 homes that (at one time) appraised at $80,000 to $120,000 and because of so many foreclosures for the neighborhoods, these homes could be bought for around 50% of the estimated value. Just a year earlier, this would be an investors dream deal, so he purchased about 20 of these homes. Less than one year later, the value of the most expensive home was less than $20,000. No doubt this ordeal was devastating for him and his family and so far he has lost about one million dollars because of this investment. I hear stories like this, and worse, every single day and because of this, I highly recommend novice investors stay away from foreclosure real estate investing.
Another massive downside with buying foreclosure property is all the federal, state, and local government involvement. With the foreclosure laws changing all the time and all the fraud and misconduct going on, making a income with a foreclosure property is not only very difficult, but it can easily be illegal under certain conditions! I would rather stick to a safer bet, one that doesn't involve the risk of incarceration.
Many people are also getting into loan modification or other type of foreclosure businesses. If you are looking to start a business and you can obtain the proper permits from your state, you may succeed. But the government is making it harder and harder to work in this type of business. The fact is, they don't want foreclosure victims to use “for profit” companies. They only want homeowners to get help through government programs or directly through the lenders. This way they have more control over the work out plans that are agreed to. This helps them control their own profits and losses with all the new bailout plans. Establishing a foreclosure business at this juncture will likely end in failure because of new laws and regulations and the many established companies who already better job than you likely could.
A better plan would be to invest in a business that is already successful at helping clients save their home from foreclosure. A business that has already obtained the proper licensing and has withstood the many hardships of the foreclosure industry. These businesses can be unbelievably profitable and many of them would welcome new investors. At ForeclosureFish, our main business is finding clients for other loan modification or short sale companies and we know that many of them are constantly seeking investors.
We have a similar program with our network of established modification companies that allows investors to invest without as much risk and without any physical work. Investors can participate in a marketing program that produces clients who are facing foreclosure for our established clients. In exchange for supporting the marketing, the investors share in any of the profits obtained. This type of investing is more secure in todays market, because changing real estate values can actually help the investment. Although government laws and regulations can still effect the returns. This type of investing may not return the large profits that some (successful) foreclosure real estate investors see, but a steady 20%-40% return can be a nice addition to any portfolio. This type of situation also allows investors to start at a lower entry point and raise it as the business grows. This will also mitigate a lot of the risk with this type of investment.
If you have been thinking about getting into the foreclosure real estate market, or other options to earn a living in the foreclosure industry, then make sure you gather as much information as possible before jumping in. As with any investment, doing a little research up front will pay off huge in the long run.
Nick writes for the ForeclosureFish website and blog, which provide foreclosure help and advice to homeowners attempting to save their homes. The site describes numerous methods to avoid foreclosure, including deed in lieu, loan modification, stopping a sheriff sale, and many more. Visit the site today to read more about stopping foreclosure while there is still time: www.foreclosurefish.com
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