Investing in Distressed or Foreclosed Properties – Part 2

Opportunity is knocking … how will you answer?

It’s an unfortunate and sad reality of our times but foreclosures are at some of the highest levels we’ve ever seen and more are expected. Some even describe it as a dam ready to burst (which is great news for investors – I’ll tell you why in a moment).

Consider this for a moment: Foreclosure filings were reported on 360,149 properties during July, an increase of nearly 7% from the previous month and an increase of 32% from July 2008, according to RealtyTrac (http://www.RealtyTrac.com). One in every 355 U.S. housing units received a foreclosure filing in July.

“July marks the third time in the last five months where we’ve seen a new record set for foreclosure activity,” noted James J. Saccacio, chief executive officer of RealtyTrac. “Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we’re seeing significant growth in both the initial notices of default and in the bank repossessions.”

It is unfortunate for many homeowners, but it’s also great news for investors. Why? There’s a HUGE opportunity to buy properties at pennies on the dollar. I’m talking about 30-40 cents on the dollar, which gives you an amazing profit opportunity.

In Part 1 of this series, I talked about how important this market is for investors. Here’s more advice on working with title companies and attorneys with more guidance on selling and marketing these properties …

Title and Attorneys:

For all my students, especially new investor students, I recommend using an experienced attorney, title company and escrow company. In some states, attorneys act as the title closing agent and escrow agent.  Students should check the real estate laws of their state.

1.   It is recommended to use an attorney who is a title and closing agent of a national title company as the closing agent so that if situations arise they can be remedied. Attorneys are more knowledgeable and efficient on time sensitive issues such as foreclosures.

1. Title you receive from purchasing a distressed or foreclosed property is transferred by a Special Warranty Deed.  Purchasing title insurance protects you.

Selling and Marketing Rehabbed, Distressed or Foreclosure Properties:

By practicing these principles of selling and marketing foreclosure and distressed properties, my students have achieved greater financial success in their real estate investing:

1. Market to other potential investors, friends, neighbors and family even before acquiring the property gives you the security of knowing you have a buyer for the property.
2. Place newspaper ads in local newspapers.  It is one of the best sources of attracting buyers/investors. Also, place ads on internet websites. I recommend to my students that the ads should contain words like “Fixer Upper”, “Distressed Property”,  “Bargain Sale”, “Investment Opportunity”.
3. Market to local contractors. Bringing them fixer uppers and having contacts for financing available for them will insure that the transaction will close.  I advise my students that they should compile lists of hard money lenders [private individuals that have excess money to invest] by getting referrals from other investors, joining investment clubs or starting an investment club of their own.
4. Rehab the property with quick and easy fix ups such as fresh paint and new carpet or flooring, remodeled kitchens and baths. Get at least three bids from each contractor before choosing one. Get referrals.
5. Keep copies of all receipts for repairs, maintenance, taxes and insurance during the rehab process.

Note: Several folks have asked about The Extreme Real Estate Challenge that is coming later this month. You won’t want to miss this! Go to http://www.NeckOnTheLine.com and submit your email address to learn more. Plus, I’ll give you my top 5 strategies for investing with NO MONEY DOWN.

Best of all … it’s all FREE!

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