Some of the greatest returns on real estate investments are earned by purchasing foreclosed or distressed properties. By investing money in foreclosed properties, savvy real estate investors have learned that they can purchase real estate property significantly under value. You can too if you do your research and avoid common pitfalls.
With every type of investment, there is risk. In most cases the higher amount of risk that you are willing to take results in larger returns on your investment. The same is true in real estate investing. This means that the properties that stand to make you the most money also present the most challenges.
While there are three stages of the foreclosure process where it is possible to purchase the distressed property, only one offers the greatest return. This is the Sheriffs sale or auction phase. If you are able to purchase a property at this time you could realistically take ownership of the property for as much as 45 percent under the listing price of the home. But with this reward comes great risk.
The greatest way to minimize risk when investing in real estate is to do your homework. Heres a checklist to help you out:
Find out how much of a cash deposit you will need at auction. In many cases this is 10 percent with the remaining balance due within months, weeks, days, or hours. Make sure that you know the laws in your state and county.
Try your best to inspect the property before the auction. If you can not inspect the property, strive to build up a relationship with the homeowner so that you can learn about any costly repairs that need to be done and calculate them into your bid price.
Verify that there are no other liens on the property through a title search. If you purchase the property at auction, these will become your responsibility.
Know your competition. Since the original lender for the property wins at auction 80 percent of the time, forming a relationship with the lender is a good idea.
Set a bid price and stick with it. Avoid becoming emotionally involved in the bidding process and over bidding. Have a solid idea of what you are investing in, how much you are willing to pay for it, and what type of return you expect.
Remember; the goal of investing is to minimize risk and maximize profit. By doing your homework before the auction, you will be sure to do both. Never buy a property blindly. Doing so only sets you up for failures that will cut into your profit margin.
Latest Non-Fiction Articles
Don't Let Good Grammar Spoil Good Writing
By: Philip Yaffe | 19/08/2008
Good grammar is fundamental to good writing, right? Wrong. However, years of experience working with people who use English as a second or third language have demonstrated that focusing too much on grammar can actually be detrimental to good writing. It's a question of priorities.
Modern Helicopters-the Eh-101 Merlin
By: K. Crockett | 16/08/2008
AgustaWestland is a joint venture formed by Agusta of Italy, makers of the A-109, and Westland of Great Britain, makers of the Lynx. The EH-101 is a direct competitor to the Sikorsky S-92 and was developed for both military and civil roles.
Animals
By: shivani suraiya | 15/08/2008
All about animals. About their origin, their lifestyles and their habitats including some interesting facts on different subjets. mostly based on mammals overing all extinct mammals around the world and which are not very well known.
The Three Speech Writing SECRETS You MUST Know - The Definitive Speech Writing How to Guide
By: Stuart Brown | 15/08/2008
In this article I am going to explore several techniques as to how you can improve your speech writing abilities, and also how to approach writing a speech for certain different circumstances. Whether it be for a wedding, where perhaps you are the best man, or for an important business meeting where you really need to impress. And tell you the three secret ingredients every speech needs.
Writing Your Thoughts – the Carrot and Stick Strategy
By: Nick Sanders | 14/08/2008
When you are writing, having a strategy in mind is rather useful – especially when you are wanting your reader to commit to something or someone. You will want to lead the reader in the direction you intend to finish upon and don’t want to cause confusion and misdirection in your writing. Here are a few tips on the carrot and stick strategy of writing that is good to use in a time of need.
Science: Guaranteed to Curb Creative Thinking!
By: Natasha | 13/08/2008
In today's sci- fi world dominated by facts and figures, the essence of life and belief in God's miracles have been thrust aside as illogical and futile, nonetheless God NEVER fails to surprise us....
How to Develop Your Book’s Structure
By: Melinda Copp | 12/08/2008
A man came to me last week because he needed help writing his book. He told me that he’s had this project on his to-do list for years, but he just couldn’t seem to get started. He’s literally been staring at the task—start writing my book—almost every day, and when he came to me, he still hadn’t done it.
How to Write a Bibliography
By: Stuart Brown | 11/08/2008
If you're like me, you probably put your heart and soul into creating a wonderful paper, essay or article. You know that you conducted the necessary research and that you wrote a sound paper. However, you are now at the end and you may be wondering, how can you write a bibliography? Well, I am here to tell you how.
More from James Klobasa
Common Mistakes That You Should Avoid While Flipping Houses
By: James Klobasa | 25/04/2007 | Non-Fiction
There are certain common mistakes that investors make while flipping houses. These make even the best deals go haywire.
Becoming a Landlord and How to Choose the Right Tenant
By: James Klobasa | 24/04/2007 | Non-Fiction
Choosing the right tenant is one of the most important parts of becoming a landlord. You need to understand the kind of tenants you are looking for and also verify their credentials and financial status. The latter is important to know in order to ensure the timely payments of rent.
Tips for Beginners to Become Real Estate Gurus
By: James Klobasa | 24/04/2007 | Non-Fiction
Real estate gurus had also at one point started as beginners. Everyone has to begin somewhere. However, when you get in to the business of real estate you can avoid making the same mistakes that others before you have. You can do this by taking advice from people who are more experienced in this field than you.
Becoming a Landlord and Location and Safety
By: James Klobasa | 24/04/2007 | Non-Fiction
Becoming a landlord is a profitable way of earning some money. However you need to be aware of certain small details before you enter into any tenancy agreements. This way you will know what the duties of a landlord are and what the tenants expect out of you.
5 Secrets To Make Money When Flipping Houses
By: James Klobasa | 24/04/2007 | Non-Fiction
Real estate investors who have just entered the market are often scared off by analyst reports. However the negative aspect of the report does not scare away experienced investors involved in the business of flipping houses. This is because they know how to change these shortcomings into good news.
Discounted Mortgages are a Great Way to Generate Residual Income Through Real Estate
By: James Klobasa | 24/04/2007 | Non-Fiction
Residual income through real estate can be generated through the purchase of a discounted mortgage. However, a real estate investor has to devote a substantial amount of time on this venture in order to come up with the best strategies to make the best out of a discounted mortgage. Each stage has to be carefully planned and etched out.
Residual Income Through Real Estate can be Generated Through Rental Policies
By: James Klobasa | 24/04/2007 | Non-Fiction
Rental income can be a good source to make profits and get residual income through real estate. For maximum utilization, a property with positive cash flow should be bought. An important point that a real investor should keep in mind is the insurance policy that covers the property.
How Do Real Estate Gurus Find Good Deals?
By: James Klobasa | 24/04/2007 | Non-Fiction
Real estate gurus solve problems that are related to this field for a lot of people. They are able to do this because they have the experience, the ability, the knowledge, the contacts, the experience and the resources. And the more they work on these the higher their success levels get.
Writing 
