First investment

2008-07-31T02:35:00Z

by Steven McCarthy

Have you heard about investors buying bank owned property and then flipping them for up to thirty to forty percent profit. Bank owned properties are unoccupied so you will not have to deal with the previous owners. If your interested in foreclosure investing then you need to be detail oriented and organized, there are large profits to be made in this type of investing, but the profits are hiding in the details.

You definitely want to be pre-approved for a mortgage before you start searching for properties. If you think about it, it just makes good sense, how will you know your price range if your not pre-approved. After you receive your pre-approval ask you bank for a list of their bank owned properties, buying a property from the bank that pre-approves you for a mortgage would make things much smoother.

Knowledge is definitely power! If the property makes sense for you, then you must act fast and make the purchase before other investors scoop it up. Buying a foreclosed property requires that you follow many steps. In most cases of foreclosure, the lender(usually a bank) has taken back ownership of the house.

Any property that is a bank owned property can be called an REO. “real estate owned”. All banks want to recoup as much of the money they put into the property as they can and still get it off their books as fast as market conditions allow. Often a bank owned property can be priced 5-30% below current market value. Dealing with a bank on your own can prove difficult,that is why the services of a real estate agent with experience buying bank foreclosure properties is something you should seriously consider before approaching a bank with your offer.

When you get pre approved for a mortgage loan, especially with the lender your attempting to buy the property from then the process will go much smoother and faster. Lenders are in the money lending business and not the real estate business, because of this they want the money they have invested in the property, so that they can make other loans with it and begin earning interest payments.

Don’t underestimate the cost of repairs. You should get estimates from a couple of well established contractors. Don’t forget that repairs on a home will take time. If your plan is to sell the house, factor in the time it will take to fix it up. Remember contractors are notorious for not staying on schedule. Try to find a reliable contractor that you like to work with, by using the same contractor on many different properties you will find they understand what your trying to do and the work will go much smoother.

If your pre approved for a mortgage loan, especially with the bank your attempting to buy the home from then the process will go much smoother and faster. Remember banks are in the money lending business, so they want to quickly get back the money owed them for the property, so they can go on to make other loans with it and earn interest payments.

Creative financing is nothing new and with the price of everything going up all the time the average person has become very creative in structuring their finances and that in a nut shell is the heart of foreclosure investing. You need to think about the financing of the bank owned property in a different way, you need to set up the financing in such a way that it not only pays for itself, but churn’s out a healthy profit for you.

Sandy Schweiger

First investment