If you are like me, you have listened to the news about the number of foreclosure properties and wondered how to best capitalize on this market. There is little doubt that the seeds to wealth are planted during poor economic cycles.
As it happens, I was discussing this exact philosophy with one of the brightest and most successful people I know. His idea is to seek out distressed real estate and purchase it at discounts to the true value. Then resell the property either via the buyers own financing or provide financing himself. Should he provide the financing, he will offer interest rates of 9-10%.
Notice, he is not looking to rent the properties as renting comes with all of the downside of being a landlord. Rather he wants to sell the property. By selling the property, the buyer is responsible for all maintenance, repairs, and insurance. As the mortgage holder, he will require his buyer to list him as the lienholder on their homeowners policy, and he is going to require them to provide him with a 20 year term life insurance policy with the mortgage holder named as the beneficiary. Brilliant!
Seeking out distressed property used to be very difficult. However, with the internet so much of this information is just a few keystrokes away. His main source is Foreclosure Deals. This company is an aggregator of information. You merely type in a zip code and it pulls up every foreclosed property in the area. These guys take all of the time and hassle out of tracking down foreclosed property.
Just imagine finding a house with a value of $200K, buying it for $120K, and selling it for $180K. Then imagine doing that just once every 3 months. Now that’s a nice annual income.
To be sure, this can be a perilous adventure if you don’t know what you are doing. You also need to be fairly comfortable with your knowledge of real estate prices in your market. For example, several markets like California and Florida went through an incredible housing bubble, so knowing the real value may be difficult. However, most of America did not go through the extreme housing bubble so much of the real estate is not very overpriced. However, all parts of the country are going to feel the effects of the down economy which is going to create some golden opportunities for those that seek them out.
The foreclosure market may or may not be your thing. I certainly don’t want to talk you into taking undo risk. However, I do want to invite you to expand your mind about the great potential that this economy is providing us.
Just for grins, here is the link to the foreclosed property site. Click on the link, then click on your state, and then enter your zip code to see how many foreclosures are in your area. Foreclosure Deals