How
To Profit From Foreclosures Like A Pro?
Foreclosure
listings have sky rocketed between 2008 and 2010 due to the credit
crisis faced
by the major banks, private mortgage lenders and the rest of us mere
mortals.
Many
people who never thought that they could end up being jobless have
suddenly
realized that there is no such thing as certain job security. There
isn’t and I
still remember the times when I was politely arguing with one of my
senior
medical colleagues that there is no such thing as job security.
This
argument was around 2005 when I was starting to learn how to invest in
real
estate and warrants in the stock market.
Right
now he will probably be arguing the same argument for me against one of
his
younger colleagues telling them what I used to tell him before the
housing and
credit crisis hit full force.
There
is
a certain type of mob mentality when it comes to investing and you have
to be
very much aware of it or you will end up on the wrong side of a
dangerous trend
shift. Right now there is a serious surge of foreclosures world-wide
and many
people were caught off guard with their financial pants down.
This
financial crisis is part of the normal ebb and flow of money and it
will
unfortunately recur after another 5 to 15 years time. When politicians
promise
to curb the financial crisis and the growing trend of foreclosures and
liquidations they get more votes from people who are deliberately
misinformed
about how to truly make money and wealth.
You
do
not have to be a sheep and follow the crowd.
Let’s
look at foreclosures more carefully.
When a bank gives out a mortgage to their client they have to assess whether the client can afford the monthly repayments and the possible interest rate increases for the entire term of the mortgage loan. This becomes a very complex job for our junior banker so he gives it to his already swamped loan manager who glances at it.
The
loan
manager’s salary and bonus depends on how much good loans he
issues out and how
much money he makes for the banks. He is under pressure to give loans
(well,
not right now since we are in a bit of a recession). This made it very
possible
for everybody to get unrealistically high mortgage approvals during
2002 to
2006.
Now
with
the rising interest rate and the slow down most companies cannot easily
get
credit to keep their cashflow stable and this leads to lower chances to
get
more loans from the already frightened banks.
I
am
going to give you a quick glance on how does foreclosure work for you.
You
must do your home work. Do not get lazy because the lazier you get the
more
money you risk losing and end up having to foreclose your investment.
1. Make
sure you know
the value of the same size property in the area with the same amenities.
2. You
must make sure that the owner is not going to oppose the foreclosure.
3. You
must make sure that all the rates and taxes are calculated to the last
day or
you will be liable.
4. You
must inspect the property.
5. You
must pay a trusted contractor and valuator to assess the premises.
6. You
must make sure the appropriate municipal permits are ready and be ready
to
solve them.
7. Check
for property liens at the local municipality or court house.
8. Ask
an escrow agent or conveyancer to make sure that the foreclosed
property is
fully demarcated. (It’s no use paying bargain price for half
the property and
another small fortune because the boundary wall is on the neighbors
plot.)
9. Make
a solid plan
by estimating all the costs and how long the eviction will take, how
long the
renovations or repairs will go on. (If it works out faster great, if
not poor
planning by you.)
So
go
look through the local free foreclosure listings and find the ideal
investment property
and make a deal, they can say no, but they could also say yes. You will
never
know until you get off your butt and do it!
