By: Diya Sood
If you’re active in real estate investing, you may already realize one of the biggest issues real estate investors face: Finding Great Deals.
Foreclosures at a 52-year High
With foreclosures at a 52-year high, there are thousands of deals available on the market, if you know where to find them and how to secure them. The first challenge you’ll face once you locate the property is that most of these homeowners are mortgaged to the hilt. They have no equity, and big loan payments. In fact, many actually owe more than the property is worth!
Most investors will walk away from these deals because they see no obvious profit. That’s because they don’t know about the Short Sale.
WHAT IS A SHORT SALE?
The concept behind the short sale is simple: your goal as a real estate investor is to convince the bank to sell for less that is owed as payment in full. Of course, this concept is easy - buy the foreclosure from the bank at a big discount, sell the real estate, and make money! So how does it work?
Success with short sales can be accomplished in the following steps:
Step 1: Do your research. Many new real estate investors make the mistake of waiting until some subscription service sends you the list. The disadvantage is that a ton of other investors are also getting the list. If your first contact is to send a letter, forget it. Your letter will be lost in the huge pile the homeowner is getting from all sorts of other investors, credit repair etc. 99% of the time these go directly into the trash or a big basket unread. If you go directly to their door you’ve got a chance.
So if you’re going to mail, be the first to act when the default notices are printed in the local newspaper. Or be the first at your courthouse, if that’s where they’re filed first. The key to finding investment-worthy properties is to act quickly. Be disciplined and mail out the letters the very same day-in fact take them to the post office. In this business, the early bird really does catch the worm.
Tip for Success: If you don’t have a company that publishes your notices of default, check with local title companies or bankruptcy attorneys to see if they offer these services; you need somebody familiar with the subject that visits the courthouse often.
Step 2: Develop your marketing strategy. When you have located foreclosures, make sure your timing is swift. Mail your initial letters of approach to the homeowner the same day you discover the property. Placing ads in your local papers also helps to generate leads and find homeowners eager to avoid the credit penalties involved with foreclosing.
Tip for Success: A typical advertisement strategy taught in real estate training is to get listed in real estate or credit section of the classifieds. These ads typically have a bold, to the point headline, such as “Avoid Foreclosure” or “Stop Foreclosure, Today!” If you are targeting a specific property type, or reaching for higher market values, specify this in your ad. (Instead of simply “Avoid Foreclosure,” add your target market to the bottom of the ad. Example: “Avoid Foreclosure, call 1-800-555-1212. 500K and up.
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