An Overview Of Foreclosure Real Estate Investing

Today’s economy is having a tremendous impact on the housing market. As cost of living expenses rise disproportionately with salary, many people are finding that they are living in houses they cannot afford. While perhaps an unfortunate experience for the homeowner, the investment potential for such a situation is astounding. For this reason, foreclosure real estate investing is gaining popularity in America.

Foreclosure real estate investing can be extremely profitable, if done correctly. Often it involves finding properties in foreclosure, and offering to acquire the property through what is known as the short sale. Short sales allow banks and other lien holders who have assumed ownership of a defaulted property to recover some of their potential losses. Through short sales, the potential buyer negotiates with the lien holders to purchase a property, often at a price well below the value of the property. In nearly all cases, the amount of the short sale doesn’t even cover the loan balance of the defaulted mortgage, a bonus for the foreclosure real estate investor.

Despite the loss of monies, there are some advantages to be had by the bank or lien-holding institution. A short sale guarantees a financial institution that at least some of the money from a defaulted mortgage loan will be recovered. A Loss Mitigation Department can negotiate the best deals to reduce the overall loss margin for the bank. Even with the loss of some funds, holding on to foreclosure properties can represent a huge liability to the financial institution. The recovery of any money is better than none at all, so the short sale is a way out, so to speak. The real estate investor wins.

Finding properties for foreclosure real estate investing is not difficult. Many listings can be located through online databases. Additionally, many financial institutions may advertise their foreclosed properties both in print and on the internet as a part of the institution’s site. The driven real estate investor recognizes that potential sales are everywhere, and uses all of his or her resources to locate short sale candidates.

Foreclosure real estate investing is a great opportunity for investors to obtain homes cheaply, and sell them again for large margins of profit. As with any type of investment, there are some risks involved. However, in today’s ‘Buyer’s Market,’ the benefits more than outweigh those risks. For the right person, foreclosure real estate investing is an excellent and secure way to invest.

Make Good Returns With Real Estate Investments

Real Estate is one of the most lucrative investment options available on the market today. I personally believe in this investment option as I am involved in commercial property investment. Property offers the highest return on investment over any other type of investment available. This investment option allows the largest accumulation of wealth during a relatively short period of time.

For example, if you invest in property, you automatically receive a number of tax reducing privileges that do not happen for other types of investment. Since taxes amount for at least 30% of your annual expenditures, saving on taxes can make your investment much more solid and lucrative. Before you can think about venturing into this type of investment, you need to learn as much as you can before you invest a single cent. Take classes and seminars on investment analysis, real-estate finance and commercial lease analysis.

The second step is to look for the right properties. Do your research to find what comparable properties are sold and rented for in the location you are considering. The right property attracts the right tenants or buyers, so spend time and effort up front on finding desirable properties. A good rule of thumb is to look for the worst house on the best block, since you can make many changes to a property but you can never change its location.

Real estate investments are categorized into two main categories namely; residential and commercial property. Depending on your capital and personal preference, you can choose to invest in either residential or commercial property. I have listed different types of real estate investment options below by category: Residential/housing

Family Homes – This is the simplest and most common type of property investment on the market. Families need houses to live in. The demand is very high, and also this the easiest investment to start with as little knowledge is required to venture into this category.

Condos/Estates – These are multi-family homes and the second common type of property investment. It is important to be careful with your assessments on the property and your numbers when calculating your likely return on investment.

Commercial
Commercial property is a bit sophisticated type of investment; this requires some knowledge about this market. However, you can still start with this type of investment with the help or guidance of a seasoned real estate investment consultant. Commercial property offers the highest return on investment if the numbers are played intelligently.

Investment in commercial property covers retail properties, office buildings, shopping centers, hotels, warehouses, manufacturing facilities, apartment complexes – and vacant land that has the potential for development for these types of buildings. In short, almost any kind of real estate except single-family home and single-family lots can be regarded as commercial real estate.