Bank owned property can be the holy grail for real estate investors. American mortgage lenders are ripe with foreclosure's, with no end in site. With the sky rocketing cost of oil propelling the price hikes in just about everything you can think of, and the new credit card regulations that were supposed to ease the burden on the American public allowed credit card companies to double their minimum payments causing family's that were struggling on the edge are now falling into ruin.
This is a very grave problem for the property owner as well as the mortgage lenders. The mortgage lender needs to redeem the cash tied-up in the real estate. The property owner has problems to their bill's are piling up, they are starting to miss payments and hoping for a miracle before they hit rock bottom and lose it all.
Then they receive the letter from the bank stating they have started foreclosure proceedings. Unfortunately, this is when most property owners just give up and ride their misfortune into the ground. It can take ten to fifteen years for your credit to recover from foreclosure.
Any property that is a bank owned property can be called an REO. "real estate owned". All banks want to recoup as much of the money they put into the property as they can and still get it off their books as fast as market conditions allow. Often a bank owned property can be priced 5-30% below current market value. Dealing with a bank on your own can prove difficult,that is why the services of a real estate agent with experience buying bank foreclosure properties is something you should seriously consider before approaching a bank with your offer.
As a real estate investor you will view many properties, hiring a professional home inspector will protect you from hidden problems that need repair adding extra expense to the property, another perk to hiring a home inspector and developing a working relationship with them is by walking with them and asking questions you will start to pick-up on how to spot potential problems for yourself which will help you narrow down your list to more profitable choices.
This sober reality, along with a considerable number of properties in their portfolios, causes the banks and lenders to be very motivated to sell at a much more reasonable price. They want to sell off as many of their portfolio properties as possible to free up their capital, So they can then reinvest that capital, and get a return on their new investment. To make that happen, they must sell the foreclosed properties. This gives them motivation to sell the properties as quickly as possible.
This motivation, combined with the principle of supply and demand, results in foreclosed properties being available to investors below their market value. The difference between what an investor sells a property for, minus acquisition cost and expense, is the investor's profit. Investors can increase this profit in two ways. The first is to maximize what they sell the property for by making improvements. Since foreclosed properties are taken against the wishes of the homeowners, they will not be in pristine shape without some work before re-selling, as a traditionally marketed real estate is.
The idea of creative financing is not a new idea, and historically with the price of everything rising all the time everybody has become very adept in the creative structuring of their finances and that is the essence of foreclosure investing. You want to think creatively about the financing for the bank owned property in a unique way, What you want to do is set up the financing on the property in a way that makes it not only pay for itself, but provide a healthy steady profit for years to come.
This is a very grave problem for the property owner as well as the mortgage lenders. The mortgage lender needs to redeem the cash tied-up in the real estate. The property owner has problems to their bill's are piling up, they are starting to miss payments and hoping for a miracle before they hit rock bottom and lose it all.
Then they receive the letter from the bank stating they have started foreclosure proceedings. Unfortunately, this is when most property owners just give up and ride their misfortune into the ground. It can take ten to fifteen years for your credit to recover from foreclosure.
Any property that is a bank owned property can be called an REO. "real estate owned". All banks want to recoup as much of the money they put into the property as they can and still get it off their books as fast as market conditions allow. Often a bank owned property can be priced 5-30% below current market value. Dealing with a bank on your own can prove difficult,that is why the services of a real estate agent with experience buying bank foreclosure properties is something you should seriously consider before approaching a bank with your offer.
As a real estate investor you will view many properties, hiring a professional home inspector will protect you from hidden problems that need repair adding extra expense to the property, another perk to hiring a home inspector and developing a working relationship with them is by walking with them and asking questions you will start to pick-up on how to spot potential problems for yourself which will help you narrow down your list to more profitable choices.
This sober reality, along with a considerable number of properties in their portfolios, causes the banks and lenders to be very motivated to sell at a much more reasonable price. They want to sell off as many of their portfolio properties as possible to free up their capital, So they can then reinvest that capital, and get a return on their new investment. To make that happen, they must sell the foreclosed properties. This gives them motivation to sell the properties as quickly as possible.
This motivation, combined with the principle of supply and demand, results in foreclosed properties being available to investors below their market value. The difference between what an investor sells a property for, minus acquisition cost and expense, is the investor's profit. Investors can increase this profit in two ways. The first is to maximize what they sell the property for by making improvements. Since foreclosed properties are taken against the wishes of the homeowners, they will not be in pristine shape without some work before re-selling, as a traditionally marketed real estate is.
The idea of creative financing is not a new idea, and historically with the price of everything rising all the time everybody has become very adept in the creative structuring of their finances and that is the essence of foreclosure investing. You want to think creatively about the financing for the bank owned property in a unique way, What you want to do is set up the financing on the property in a way that makes it not only pay for itself, but provide a healthy steady profit for years to come.
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