February 22, 2024

Fryer And Brown

Creating Your Dream Home

Real Estate Investments in the Foreclosure Market

People are making more and more real estate investments in the foreclosure market. The economy has rarely seen the kind of foreclosure activity that is taking place at present and the wise investor is taking advantage of this market. The banking industry has make use of some bad lending practices and thus the industry is suffering. Mortgage failures are top of the list of loan failures today and this sees many banking institutions with thousands of foreclosure property in their inventories.

While the economy was still relatively strong, borrowers were tempted by variable rate loans and sub-prime loans and many made use of both these types of lending facility. A sub-prime loan is a financial loan vehicle that was made available to prospective home buyers who could not qualify for a normal mortgage loan. These loans are charged a higher tan normal interest rate in order to lessen the risk to the lender. Variable rate loans were taken so that the borrower could take advantage of a lower monthly mortgage payment. But when interest rates go up as we have seen, then the mortgage becomes suddenly unaffordable. Take into consideration the fact that food and gas prices have increased and throw al of these factors together into the mix and you will see why the foreclosure rate is so high. It is actually bankers and mortgage brokers who are responsible for this huge mess, and the government seems to be bailing out these big companies while the man in the street is left to fend for him-self.

According to some new resources, foreclosures have increased by 50-65{bc081577d937b036760250a838c458dd2cdabe6c805de7ee78ca03a8e3da3931} over last years figures. The highest levels of these are being seen in California, Nevada and Florida metropolitan areas. This has driven housing prices down to an al time low and buyers are taking advantage of bargain real estate investments. There is always some kind of opportunity available in a crisis.

Because of the foreclosure crisis, it is now tougher than ever to obtain credit. People in the US are already carrying far more debt than they can manage, and banks are toughening up on their lending policies. Home sales are down, but apparently not in the foreclosure market. More buyers are aiming their investing practices to the foreclosure market. Real estate has always been a wise place to invest money for good returns and great profits. As more default notices are issued foreclosure activity increases, and bank repossessions are skyrocketing.

Never believe that purchasing a property from someone who is undergoing a foreclosure is a bad activity. If you can save that property owner from foreclosure, you will also be saving his or her credit rating. The foreclosure process is a seriously complex proceeding that damages a credit rating for many years to come. Many home owners in the foreclosure process are happy to sell to willing buyers to save this from happening, and they will certainly live to fight another day.

Acquiring a property from someone who faces foreclosure may save their credit rating.

But before you invest in foreclosures know this:

1. Market Value

In these rapidly changing markets it is crucial to know the market value of any property that you plan invest in. The difference between its market value and what you pay for it will determine whether you can make a profit.

2. The Law

You do not want to run afoul of the law. Check with your attorney (and probably your accountant too) to make sure the deal you are structuring is legal in your state.

3. Cash, Moolah, Money

It takes money to buy a property. If renovation is necessary, it takes money. Maintenance takes money. It takes money for ongoing payments to hold the property while you renovate or sell it. It takes money to sell it for advertising and commissions. Do you have it. Does your partner have it? Show me the money! Or at least make sure you know where it is.