buy REO properties and the following other properties that government institutions and law enforcement agencies take possession of and then often sell at deep discounts:
Properties seized due to nonpayment of taxes
Properties seized by customs and law enforcement agencies because they were paid for with profits from illicit activities
Houses that were repossessed when homeowners defaulted on HUD (U.S. Department of Housing and Urban Development) or VA (U.S. Department of Veterans Affairs) loans
Fannie Mae and Freddie Mac properties that were repossessed and then turned over to these government-sponsored loan programs
Bankruptcy properties that are being liquidated to pay off loans
Properties that the U.S. Department of Transportation purchased for road improvements and must dispose of after completing the improvements
Assembling a Team of Experts and Advisers
Flying solo on foreclosures may seem like a good idea. After all, any professional help you get will eat into your profits, right? Flying solo, however, is a good way to go bust or at least to limit your potential profit. Developing synergistic relationships with top-performing specialists has been a key to my success (and to the success of almost all the top real estate investors around the world).
In addition to providing expert guidance and advice for seizing opportunities and avoiding common pitfalls, experts deliver leads to potentially profitable properties, affordable financing, and quality contractors. They can assist you in managing your finances and in renovating and selling your property for top dollar after you purchase it. And, by delegating some of the workload to others who are better equipped to handle it, you free up time and resources for finding the most profitable opportunities.
In Chapter 4, I explain how to assemble a solid foreclosure investment team consisting of the following members:
Real estate agent
Real estate attorneySTAND BY YOUR MAN — OR WOMANTell your spouse or significant other about your plans to invest in foreclosure properties and ask for help. If your spouse is a couch potato and would prefer to remain anchored to a lounge chair than to help you work nights and weekends, you're likely to find yourself swimming upstream — right into a concrete dam.Your better half needs to know that you’re planning on earning tens of thousands of dollars per deal, and because you’ll probably be spending that money together, there’s no room on the team for a couch potato.I strongly recommend against making any attempts to invest in foreclosures without the full consent and eager assistance of your partner. I would hate to hear that after reading this book, you and your better half stopped calling each other “honey” and “sweetie pie,” and started calling each other “plaintiff” and “defendant.”
Mortgage broker
Accountant
Title company
Home inspector
Contractors
In Chapter 5, I lead you to sources of financial capital to fuel your investments, and in Chapter 6, I lead you through the process of developing a strong support network that virtually ensures that you’ll never run out of leads on profitable foreclosure properties.
Getting Your Financial Ducks in a Row
In real estate, cash is king. In foreclosure investing, cash is the grand, high-exalted mystic ruler. Investment capital enables you to step in at any stage of the foreclosure process and buy out anyone who has a claim on or an interest in the property.
Cash gives you the upper hand with the four Cs:
Credibility: With cash, you have instant credibility that you can deliver on your promises without hesitation. In most cases, homeowners need cash to escape their current financial crisis. Lenders need cash to cut their losses. With cash on hand, you can give homeowners and lenders what they need to achieve their goals while you take possession of a profitable property.
Confidence: Cash provides you the confidence to pitch offers to homeowners and lienholders, knowing that you can deliver in a timely manner.
Creativity: Putting together a foreclosure deal that satisfies all parties often requires a great deal of creativity. With sufficient capital, you liberate your imagination from financial limitations.
Competitiveness: Multiple real estate investors often compete for the same property. Cash gives you a competitive edge because it enables you to execute a deal much more quickly. Both homeowners and lenders are eager to put the current crisis behind them. An ability to act quickly often separates the successful investor from the wannabes.
The question “Where am I going to get the money?” often derails the novice investor before the train leaves the station, but many of the most successful investors started with only a few bucks in their pockets, including yours truly.
Finding Foreclosures and Seized Properties
The first step in foreclosure investing — finding potentially profitable properties — is often the most difficult for first-time investors. Plenty of foreclosures and seized properties are available, but where do you look for them? The answer to that question varies depending on which part of the foreclosure process you choose to focus on, but here’s a list of where you can find leads on foreclosure properties:
The neighborhood grapevine, including neighbors, churches, cafes, clubs, and even people who contact you directly for assistance when they know that you buy distressed properties
Auctioneers
County offices, especially the sheriff’s office
Drive-bys (driving through neighborhoods looking for dontwanners — homes that are unkempt, indicating that the