Pre-Foreclosure Investing - A Market To Consider As A Investor

Is There Anything Good About Foreclosure?

Investors that specialize in buying existing notes to enhance and grow their monthly cash flow streams might consider a market which sadly, is booming - the foreclosure market. When one market is booming, another market is created. In this case and one you may have interest in is, pre-foreclosure investing. It was announced in May 2010 that a record high of bank repossessions was reached. A staggering 93,777 properties were taken back from homeowners in May, up one-percent from the previous month, April, and up 44% for the same time period last year. However, as gloomy as it may be, there is money to be made as a note investor and possible salvation for some homeowners sitting in the sites of their mortgage holder.

Avoiding a foreclosure can help save the credit rating of homeowners. In this case, although they will lose their home, they can avoid the mark of foreclosure on their credit report if a savvy investor chooses to buy up the property before the evil banker swoops in like a bird of prey and sinks their talons into the homeowners exposed credit rating.

Pre-foreclosure investing is specialized to be sure but also lucrative with discounts as high as thirty percent off market value being obtainable. But first, we need to understand the basics of a foreclosure. Banks and other financial institutions really don’t want to foreclose on property owners, contrary to popular opinion. It’s a loss for them plain and simple. However, since the economy is in shambles, homeowners can’t keep up with their payments, falling further behind each month until the bank has no choice but to foreclose and take the property back.

What this means for you as an investor is money! Banks don’t want these foreclosed properties on their books and are willing to unload them at auction. With pre-foreclosure investing there is short window of opportunity for an investor to take advantage of the opportunity. Once the homeowner defaults on their loan, the clock begins to tick toward repossession which is the ideal time for the investor to make his play.

Fortunately for you as an investor, foreclosures are frequent and rather easily to find given the amount of services available that monitor foreclosures on a day to day basis, listing them each day. If you decide to enter the pre-foreclosure investing market, you need to monitor these publications daily. Once you find a property of interest, the first order of business is to contact the homeowner and make an offer for them to sell you the property.

This may be the most difficult part of the whole process - making contact with the homeowner. Once you make contact, it can be difficult to deal with people that don’t understand the real estate industry on top of the fact they are already stressed and overwhelmed because they are losing their home. However, at this point they have probably accepted the reality of the situation and with you, the investor, offering them the opportunity of avoiding a foreclosure mark on their credit report can make you the hero.
Another thing to consider, you may need to approach and negotiate with any lien holders which they may have placed on the property.

Whatever the case, pre-foreclosure investing in a booming market with readily available profits is nothing more than another income stream for you as cash flow note investor to increase your portfolio.