How To Make Money In The Foreclosure Market , Without Investing In Real Estate

By Author: Nick Adama
Total Articles: 197
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Many investors have made a ton of money over the last 4 years with bank foreclosures. But they've either taken on a great amount of risk or they've done quite a bit of work to make their profits. As always, there are a few who got lucky and were in the right place at the right time, but in general, investing in foreclosures is either a big risk or more trouble than it's worth.

When it comes to investing in foreclosure real estate, with all of todays problems, it's necessary for someone else to take a loss in order for an investor to realize a profit. In most cases, it's the foreclosure victim who ends up losing. Most people think they are doing the foreclosure victim a favor when buying their home, but the truth is, unless they are paying near the market value, it's harmful to the homeowner. This is such a problem in some states that they've adapted laws against investors buying a home in foreclosure and then flipping it for a profit.

Quite a few real estate investors have also lost their fortunes by getting into the market at the wrong time. Once successful individuals, developers, and corporations have all ...
... lost millions due to buying foreclosure properties that continue to decrease in value. With the state of the world these days and the government printing and giving away money that it will never have, it's just a matter of time until our entire financial system falls apart. Expecting a property value to increase is just not realistic in the foreseeable future.

For example, an ambitious investor I know in Toledo found a few homes that (at one time) appraised at $80,000 to $120,000 and because of so many foreclosures for the neighborhoods, these homes could be acquired for around 50% of the current value. In past years, this would be an investors ideal situation, so he purchased about 20 of these homes. Less than one year later, the value of the most expensive home was less than $20,000. No doubt his experience was devastating for him and his family and so far he has lost about one million dollars because of this purchase. I hear stories like this, and worse, every single day and because of this, I highly recommend novice investors stay away from foreclosure real estate investing.

Another major problem with buying foreclosure property is all the federal, state, and local government involvement. With the foreclosure laws changing on such a regular basis and all the fraud and misconduct going on, making a profit with a foreclosure property is not only very challenging, but it can easily be illegal under certain conditions! I would rather stick to a safer bet, one that doesn't involve the risk of ending up in prison.

Many people are also getting into mortgage modification or different types of foreclosure businesses. If you are looking for a new job and you can obtain the proper permits from your state, you may be successful. But the government is making it harder and harder to operate this type of business. The fact is, they don't want foreclosure victims to use for profit companies. They only want homeowners to get help through government programs or directly through the lenders. This way they have more control over the interest rates that are agreed to. This helps them control their own profits and losses with all the new bailout plans. Getting into loss mitigation business at this point in time will likely end in failure because of government regulations and the many existing professionals who already better job than you likely could.

A more favorable option would be to invest in a company that is already successful at helping clients modify their loan when facing foreclosure. A business that has already obtained the proper licensing and has withstood the many hardships of our industry. These businesses can be wildly successful and many of them would certainly consider new investors. At ForeclosureFish, our main business is finding clients for other mortgage modification or real estate companies and we know that many of them are constantly asking about investors.

We have a similar program with our network of established modification companies that allows investors to invest without as much risk and without any physical work. Investors can participate in a marketing program that produces clients who are facing foreclosure for our established clients. In exchange for funding the marketing, the investors share in any of the profits obtained. This type of investing is more secure in our economy, because dropping real estate values can actually help the investment. Although government laws and regulations can still effect the returns. This type of investing may not return the large returns that some (successful) foreclosure real estate investors see, but a constant 20%-40% return can be a nice addition to any portfolio. This type of situation also allows investors to start at a lower entry point and raise it as the business grows. This will also mitigate a lot of the risk with this type of investment.

If you have been thinking about getting into the foreclosure real estate market, or other ways to earn a living in the foreclosure industry, then make sure you do your home work and talk to other investors before jumping in. As with any major purchase, doing a little research up front will pay off huge in the long run.
Nick writes for the ForeclosureFish website, which gives homeowners the advice and resources they need to avoid foreclosure by themselves and defend themselves against the bank's lawsuit. The site describes numerous solutions to save a property, including foreclosure loans, deed in lieu, loss mitigation, stopping a trustee sale, bankruptcy, and more. Visit the site on the web to read more about how you can avoid foreclosure and eviction, repair your credit, and establish a long term financial plan once a crisis is over: http://www.foreclosurefish.net/