Finding foreclosure properties to begin real estate investment is relatively simple. There are several methods of find property that is has been foreclosed or is in the process of being foreclosed. Here are a few of them.
1. Records at the local county courthouse. In this method you can find the houses that are being foreclosed either by lending institutions or for non-payment of taxes. This method is time consuming, but you have complete control over your search. The thoroughness of the information you collect is totally dependent upon the work you put into it.
2. Newspapers. In every newspaper in the country there is a section for legal notices. These notices hold the legal information for properties in foreclosure. These notices will name the person(s) who has the legal proceeding against him/her, the name of the lender(s), the name of the county sheriff, if this is a tax foreclosure, or any other pertinent information. It will give the date of the proceedings and ask for further information from anyone who wishes to put a lien against the property.
3. The internet. Online foreclosure listing companies will search for notifications of default. Then they sell a subscription for this information. Although this is a very easy way to get the information about foreclosures, this is a ‘buyer beware’ situation. There will be others using this service that are looking for the same information that you’re looking for. Along with that, you need to be sure that the information you get is current and not outdated. See if they’ll give you a free trial period before purchasing.
4. Direct Mail. Consider a mass mailing through the postal service for home owners going through a foreclosure. As you receive information back from this mailing you can be assured that these are good leads. Another advantage is that you may be able talk with to someone that is still in the pre-foreclosure period. They are motivated to sell, or they wouldn’t have made contact with you about their property.
5. Real estate companies. A bank that ends up with properties that are being foreclosed will hire a real estate agent to represent them The bank doesn’t want the property; it wants it sold. A good real estate agent can get a list of properties that the bank has possession of. read more…
Although there general guidelines from the federal government about foreclosures, each states has its own specifics that will apply. There are two types of foreclosure; judicial foreclosures and non-judicial foreclosures. Judicial foreclosure will have action from the court, while non-judicial are done outside the realm of the court. The criteria for a judicial foreclosure is that a home is purchased through a mortgage; the criteria for non-judicial foreclosure is that a home is purchased through a deed of trust.
Step 1. Delinquency of payment.
Foreclosure proceedings begin when a homeowner becomes delinquent on payments. Typically this is usually when the borrower/owner is behind by three payments, but it can begin with one delinquent payment, depending upon the lender.
Step 2. Notice of Default or Lis Pendens.
This is known as the pre-foreclosure phase of the process. The lender will have a trustee record the Notice of Default at the county recorders office. It’s during this time the borrower still has the opportunity to reinstate the loan or pay it off. It is also during this period that the bank accelerates the payment, requiring the borrower to pay the mortgage in full; no payments accepted. There is a period of 3 months before final proceedings begin.
Step 3. Notice of Sale.
The borrower will receive by registered mail or by the delivery from the Sheriff the Notice of Sale, or Notice to Foreclose. There will be a sign posted on the property with the Notice of Sale with the time and location of the sale. The information will be recorded at the county recorder’s office, and published in the local newspaper in the county where the property is located over a period of three weeks. read more…
Foreclosed homes create an opportunity for investors to not only personally profit, but can breathe life back into neighborhoods. Here’s one scenario: an investor buys a foreclosed house and then makes necessary repairs and/or updates on the property. That investor then can either sell the house at a greater profit because he made the repairs, or he uses it for rental property and makes money every month that it is rented. This helps the surrounding community because the repair/update of the house beautifies the area, helping to raise the value of the other homes there. A neighborhood where the homes are attractive and occupied is more warm and inviting as a whole.
Investors of foreclosed homes can also help the economy of the community. Let’s take the same scenario that we started above. The home the investor purchased is now generating money for the city or county by means of property taxes. This helps increase the tax base for road repairs, trash services, police and fire services, etc. The repairs that were completed on the property increased business for the goods and services that were used, such as home building stores and contractors.
Along with the repair process for the property, think about the foreclosure sale itself. The investor is required to use the services of title companies, real estate agents, as well as the lending institution itself.
After the sale of the foreclosed property to the investor, the lending institution will reduce their real estate owned (REO) liability. They also have the possibility of becoming the financer of a new loan.
Finally, in this scenario, when the investor sell that property or rents it to someone, there’s another person(s) or family that is able to enjoy living in that property and who will increase business within that area. They become invested in the community. A beautiful neighborhood increases community pride and makes for a healthier community. A good deal for everyone. read more…
