Investing in the real estate market is becoming more and more popular, as the market continues to do well. Investors are drawn to the freedom and independence they can have by being their own boss. If you are looking to start investing without spending a lot of money upfront, consider investing in preforeclosures for the following reasons:
1. You can pay less upfront to invest
Preforeclosures are houses that are in default with the bank because the owners have not been making their payments. The bank will first try to negotiate with the owners of the house in the hopes of getting their money back, and if that fails, they will start the foreclosure process. Investing in houses that are in the preforeclosure state can cost you less to bring the loan current with the bank when you assume the loan “Subject To”. You can contact the county office in your immediate area and find out what properties are in preforeclosure.
2. You can help people
Property owners don’t want to ruin their credit or have a foreclosure on their record. When a house is in preforeclosure, it means that the loan has already defaulted. The homeowners want to get the bank off of their back, and the bank simply wants their money so they do not lose too much. This gives investors the perfect opportunity to negotiate the price to something they are comfortable spending on a new investment and help people at the same time,
3. You can purchase homes without a credit check
Purchasing the home “Subject To” the existing loan, you will take over the payments and have them sign over the deed to you. If you have less than perfect credit and worry about being able to qualify for a loan to finance a house, buying a preforeclosure “Subject To” gives you the option to simply take over the loan that has already been set in place from the previous homeowners.
4. You can skip the auctions
You can skip the whole auction process by buying a house in preforeclosure state. Many investors acquire their properties by bidding and winning them at an auction. Auctions can be confusing, and if someone outbids you on every property, you are back to the beginning. Buying a house in the preforeclosure state gives you a better chance at getting an investment, rather than having to contend with bidding wars at an auction.
There’s plenty of ways to create profits as a real estate investor and investing in preforeclosures is certainly a great way! It gets easier the more you learn about the ins and outs of investing in, so keep putting forth the time and effort. It will pay off!