|
How To Make A Profit In The Foreclosure Age , Without Investing In Real Estate |
|
|
|
|
Written by Webmaster
|
|
Thursday, 18 June 2009 |
By Nick Adama
 Many people have made loads of money over the last 3 years because of foreclosures. But they've either taken on a huge amount of risk or they've done quite a bit of work to make their fortunes. As always, there are a few who got lucky and were in the right place at the right time, but in general, foreclosure investing is either a big risk or more trouble than it's worth.
When it comes to investing in foreclosure real estate, in todays market, it's necessary for someone else to take a loss in order for an investor to make a profit. In most cases, it's the previous homeowner who ends up taking that loss. Some buyers think they are doing the seller a favor when buying their home, but in reality, unless they are paying approximately the market value, it's harmful to the seller. This is such a problem in some states that they've adapted laws against investors buying a home in foreclosure and reselling it for a profit.
Quite a few real estate investors have also lost all
their assets by getting into the market with the wrong property. Very successful individuals, developers, and corporations have all lost millions due to getting into the foreclosure real estate market. With the state of the world these days and the government printing and giving away money that it will never have, it's just a matter of time until our whole financial system breaks down. Expecting a property value to increase is just not realistic in the foreseeable future.
For example, an investor I know in Toledo found 20 homes that (at one time) would sell at $80,000 to $120,000 and because of so many foreclosures for the city, these homes could be purchased for around 50% of the estimated value. In previous times, this would be an investors ideal situation, so he purchased about 20 of these homes. Less than one year later, the value of the most expensive home was less than $20,000. Needless to say it was devastating for him and his family and so far he has lost about one million dollars because of this purchase. I hear stories like this, and worse, every single day and because of this, I highly recommend inexperienced investors stay away from foreclosure real estate investing.
Another massive downside with buying foreclosure property is all the federal, state, and local government involvement. With the foreclosure laws changing all the time and all the fraud and misconduct going on, making a return with a foreclosure property is not only very hard, but it can actually be illegal under the right circumstances! I would rather stick to a safer bet, one that doesn't involve the risk of going to jail.
Many people are also getting into loss mitigation or other type of foreclosure businesses. If you are looking for a new job and you can obtain the proper authorization from your state, you may succeed. But the government is making it harder and harder to operate this type of business. The fact is, they don't want foreclosure victims to use for profit companies. They only want homeowners to get help through government programs or directly through the lenders. This way they have more control over the deals that are agreed to. This helps them control their own profits and losses with all the new bailout plans. Starting this type of business at this point in time will likely end in disappointment because of updated regulations and the many established professionals who already do a great job helping their clients.
A safer option would be to invest in a company that is already successfully in the business of helping clients save their home from foreclosure. A company that has already obtained the proper licensing and has withstood the many hardships of our industry. These businesses can be unbelievably profitable and many of them would love to speak with new investors. At ForeclosureFish, our main business is finding clients for other loss mitigation or real estate companies and we know that many of them are always seeking investors.
We have a similar program with our group of websites that allows investors to invest without as much risk and without any physical work. Investors can participate in a marketing program that obtains clients who are facing foreclosure for our established clients. In exchange for funding the marketing, the investors share in any of the profits obtained. This type of investing is more secure in our economy, because fluctuating real estate values can actually help the investment. Although government laws and regulations can still effect the returns. This type of investing may not return the large returns that some (successful) foreclosure real estate investors see, but a constant 20%-40% return can be a nice addition to any portfolio. This type of scenario also allows investors to start at a lower entry point and raise it as the business grows. This will also mitigate a lot of the risk with this type of investment.
If you have been thinking about purchasing foreclosure properties, or other ways to invest in the foreclosure industry, then make sure you know the facts before diving in head first. As with any major decision, doing a little research up front will pay off huge in the long run.
Nick writes for the ForeclosureFish website and blog, which educate homeowners on how they can save their homes from foreclosure and beat the bank. The site describes nearly a dozen ways to prevent losing a home, including filing bankruptcy, loan modification, defending foreclosure in court, and others. Visit the site today to get a free e-book explaining the basics of foreclosure and learn how to fight back against foreclosure: http://www.foreclosurefish.com/
Business Share Your Opinion. (0 posts)
|
|
Last Updated ( Thursday, 18 June 2009 )
|
