Real estate is an excellent investment because it is always in demand and everyone has to have a roof over their heads.  Now real estate is a commodity just like anything else in our society in when the prices get to high just like the stock market it adjust down to where the majority if buyers believe that there is value.  So when real estate is high few buyers buy and when real estate is priced below the comparables, more people buy.  If you buy and you’re an owner occupant and you plan on staying in your home 5 or maybe 10 years, the market ups and downs don’t really concern you too much.  How ever if you are a speculator and buy near the top of the market and the values peak and turn down, you could be holding a commodity that is worth less than what you paid for it.  And that does not make a very good short-term investment.  So exit strategies when buying property are pretty important.  Now in our recent market many speculators and home owners have extended themselves by buying expensive properties with the expectation of continued appreciation in owner occupants with poor credit and no money down, used short termed A.R.M.S (adjustable rate mortgages) and went out on a limb and got involved in property they hoped would continue to appreciate, and so because of all the speculation we have the highest amount of foreclosures than ever before.  Many homeowners thought that they would be in and out of a property in a short period of time, and opted to use the A.R.M.S thinking that they would sell the property before the interest rate reset to a higher percentage.  How ever because property values turned down and property owners were not able to sell their properties, their A.R.M.S reset and left them with higher interest rates and higher payments that they could not meet.  Now home owners that have own property that have lost value are not so worried because the property is providing them with a roof over their heads.  So they just plan on staying put and in a couple of years the prices will come back.  Now the circumstances have left first time homebuyers and investors with an enormous opportunity to make some money with these foreclosures.  Now given that money and real estate investment is made when you buy the property.  It’s a great time to buy property at a discount with very low inertest rates; the only thing challenging us right now is the exit plans.  So now with the present inventory it is imperative that you purchase at a low price and that you sale at a price compared to properties that are for sale in your area.  Quick flips could take a little longer to sale and it is always best to price the property at a price that is less expensive than the other properties are going for in your particular area.

            Foreclosures have been around forever, only now there is just more of them.  It kind of seems to be the buzz on the street.  Seasoned and novice investors want to invest in foreclosures.  In 2004 the number of foreclosures was 2% of the total sales in the U.S.  In the first quarter of 2008 in Stockton California, 72% of it’s sales we in foreclosures.  In Las Vegas in the first quarter of 2008, 45% of the properties closed were foreclosures.  So you can see why there is so much interest in foreclosures.  Now the reason why they are so attractive is that if your going to be successful in real estate, you need to work with a motivated seller.  And there are not any more motivated sellers than there are going to loose their homes because they are not making the payments.  Now prior to this point foreclosures were typically as a result of divorce, unemployment, and medical bills.  In addition to these recurring reasons today.  There are also a result of the A.R.M.S loans being reset from low interest rates to higher and unaffordable for the homeowner and the property values dropping leaving no equity.

And that’s what is going on in real estate today.

            Now foreclosures are divided into 3 phrases.  First phrase is the pre-foreclosure and that is when the home owner is still in control and if they have any equity then you can work directly with the home owner.  How ever if there were no equity you would want to do a short sale.  The second phase is the auction; this is usually reserved for the experienced investor because of the financing, the property inspection, and the attached liens.  The third phase is what we call the REO; it stands for real estate owned.  This is where the property has not been sold at the auction and the lender gets it back.  This is the safest way to buy a foreclosure because all the incumbencies have been removed and you can also inspect the property before you buy.  Now I am going to say this and it is very important.  Not all foreclosures are a good deal.  So it is important that you act like a real estate detective and get all the facts about the property before you buy.  This is a very important part of the process and the more you know about the deal the better it is going to be for you.  It really is all about the numbers.  Now that sounds simple but it really is not.  When I say it is all about the numbers I mean the number of properties to choose from, the amount of research that you do, the cost and expenses versus the potential profits, and the number of offers that you make.  So depending if you are in a deed state or a mortgage state the foreclosure process could take anywhere from 21 days to 120 days or longer.  If your in a state that gives you a shorter time to do your homework, you need to find the most efficient and fastest way to make a decision about each property that you are interested in.  So remember a foreclosure is an opportunity to find a good deal.  It is not always a good deal and in today’s market there are some homeowners that are being evicted from their homes and they are leaving their properties in a complete state of disrepair.  They are putting holes in the walls, taking out appliances, ect.  So if you are if you are looking at a property that you are not allowed to go inside and se the condition of the property.  You might be buying a property that would easily cost you more to fix up than it is worth.  So again be sure to so your due diligence on each and every peace of property.

            Well people say why invest in foreclosures?  Simply foreclosures are at all time high which presents an outstanding opportunity.  High instant profit margin for the well-trained investor.  You can buy at a steep discount in m any cases.  The future trends for finding deals are up because borrowers are defaulting on their loans, A.R.M.S are resetting to higher percentages, falling property values, balloon notes coming due, unstable money markets, and security markets causing financial loses and uncertain economy which leads to layoffs.  There is always a steady inventory of new property.  Foreclosures are not really understood well or worked very well.  Most people don’t even understand the process;  there is minimum good information available to the public. 

Some properties can be purchased for little of your own money.  As we said before the sellers are definitely motivated and banks don’t want properties so they want to get rid of them as quickly as possible. 

            Why are foreclosures growing?  Foreclosures area fact of life.  Anytime a debtor breaches an obligation of a security document, like a mortgage deed, trust or something like that.  The lender has the right to foreclose on the property.  The grantor most likely does not want to acquire the property but they do want repayment of the funds owed.  Now in today’s markets we are seeing lenders lowering interest rates.  Extending loan terms and there is even talk about forgiving of the mortgage amount.  Even so there are tons of foreclosures to work.  There is an orderly process to the foreclosure, which allows the opportunity to cure the situation.  However some homeowners are not in a position to cure the default.  This may happen because a number of reasons.  Loss of job by one or more home owners, financial crisis need for immediate cash, a health or maybe family problem, business failure or down turn, divorce between couples causing a need for property liquidation.  Death of the property owner resulting in payment default.  Adjustable rate mortgages can increase quickly in times of high interest rate and result in the property owner not being able to make payment.  Balloon payments, these are large payments that cause challenge for the homeowner.  Job transfer, borrower may have two mortgage payments, out of state owner or out of Towner.

            Lets talk a little bit about pre foreclosures.  Many times you can catch the situation before the property has gone on the auction block.  We call this time period pre foreclosure.  The property is in default and several months behind in payments.  The owner may have no means of curing the default yet the clock is ticking towards the time the auction will take place and everything will be lost.  Now given that a foreclosure on a persons credit record is the single most devastating item preventing any future borrowing for years to come.  A homeowner should be very eager and happy to work with you.  Without your help they might not just loose their home but their credit will be destroyed.  A fundamental key of making money in the foreclosure market is understanding why the property went into foreclosure.  Perhaps the owner just had a temporary cash shortage.  You may be able to help them and take an equity position in the property in return for rectifying the situation.  Or the owner maybe financially devastated and just wants to dump the property before their personnel credit is destroyed.  You can help solve their immediate problem and give them a new start.

            When we talk about finding foreclosures there are many sources to aid you in finding foreclosures.  Hopefully you can find the foreclosure before it is too far in the foreclosure process and all possibility of redemption has passed.  In today’s market there is more opportunity to find foreclosures than ever before.  Following are a few locations to begin the search and will be going into much more detail in other courses of this product.  They are classified sections, legal newspapers, attorneys, FSBO’s, realtors, auction companies, IRS auctions, bankruptcies, probate court, and county courthouses, town hall or registrar of deeds.

                                                Chase Correa

                                    www.moneyinforeclosureinvesting.com

Foreclosure websites recognize the demand for such services and do their best to help their customers take informed decisions. They provide data about available properties, price range and other significant details. When lenders start to foreclose on a property, they file for a Notice of Election and Demand to be recorded by the Public Trustee. This is the way lenders announce that they are foreclosing on a property. The demand continues to increase even if rates are in the upswing. Average rent ranges to $890 per month, which is higher than last year’s figures by $7.

If the homeowner still neglects to contact the lender, the lender can make a demand for a payment in full. This is stipulated under the Standard Acceleration clause, common to most mortgage contracts. Though the former owner is probably not flush with money, these cases won’t demand very much, and the judgment and award will stay on the books for many years. A persistent tenant can probably collect what’s owed eventually. Using an LLC as his investment vehicle, Huhn either negotiates a work-out plan with the borrower or takes the loan to court and demands a foreclosure.

The demand for properties, which is a function of population growth, job growth, disposable income growth and demographic changes, will greatly affect pricing as well as the ability to sell properties at the end of the investment period. The probability for infrastructure development, such as roads, schools and community projects, the support of local and state government for a certain locale and its business growth, and plans to fix any particular issues, such as traffic, air quality, crime and taxes must be researched, as all of these items will make an area more desirable and increase the value of properties within it. For example, if the demand for a house is higher than the supply, the price will typically increase, and vice versa. Yet, if the money available to purchase houses is greatly increased and loan standards are loosened – risk is ignored, rather passed on to a Greater Fool (Institutional Investors) – the result will always be a Housing Bubble. A surprising increase in contract signing to purchase repossessed homes occurred last December indicating housing demand. The pending home resale index showed a 6.3 increase to 87.7, the first rising since August.

And as evidence, despite high foreclosure rates, there is also a considerable demand for foreclosure homes. A nationwide increase of 20% in active foreclosures has been documented.

The amount you owe will be the difference between the total debt and the value of the property. A deficiency judgment following a strict foreclosure requires a separate hearing, and you have a right to be present and argue against the deficiency. I realized that my income was going nowhere, and I was spending so much on rent and debt service that I could not even afford to buy my kids a pair of cheap shoes. I realized that even if I cut up all the cards and paid as much as I could afford, I would be paying them for another 40 years or so, but of course would have starved in the meantime. By paying off these other debts you have less outgoing each month so you will be better equipped to meet your mortgage obligations.

A creditor must exercise great care to comply with the required procedures to avoid a debtor’s challenge of the sale for noncompliance. If the challenge is successful, the creditor must begin anew, wasting time and money in the process. When a homeowner defaults on their mortgage, the lender will move to sell their property through an REO sale and use the proceeds to settle the debt. There are all kinds of different repossessed homes and commercial seized properties available in cities all over the country like Indianapolis, San Antonio and Dallas. If you address the problems early, you might be able to refinance the debt and keep your house-by far the best solution for everyone involved. If refinancing won’t work, team up with a real estate agent who has experience in short sales.

It is very important to use a debt settlement company that has an actual state licensed attorney on the premises. There have been many instances of borrowers who are already in dire need getting scammed for promises the sales man can?t keep. No sooner than twenty days (20) after the notice of trustee sale is filed, the home may be sold at public auction for the amount of the debt plus foreclosure costs. If no one bids at the auction, the lender assumes ownership of the property, and may dispose of that property to recover their cash investment. You contact the debt collector (Plaintiff) to work out a deal.