The old saying about the rich get richer has never been truer than it is right now. If you have some money to invest, you can make a real killing in the housing foreclosure market. There are many investors who look at today’s crisis in the foreclosure market as an opportunity to make some fast money. For other investors though, this opportunity which comes at the expense of average, working families is harder to take advantage of. If you count yourself as part of the second category, here’s how to make money on foreclosures and still sleep at night.
Many people who lose their houses to foreclosure have just been caught in the middle of a bad situation. Just think about the reasons for foreclosure like job cuts, the subprime mortgage interest mess, and the sheer fact that the value of most homes has taken a major dive. There’s not really anything you can do about these facts, as an investor.
But there is a way that you can help and still turn a big profit. You are buying lots of houses for only pennies on the dollar, so in actual fact you have very little money that is tied up in any house. Here’s how to help.
If you were to buy a number of houses in one community, you’d have several options. One option might be to sell the properties in bulk to another investor after marking them up. A second option might be to hang onto the properties until the sluggish housing market starts to recover and then sell them to make your profit. The final option might be to simply rent out these houses.
People who lose homes to the foreclosure process are eventually going to be forced to move. Often their choices are pretty limited. Either they move into a rental unit, bunk in with family members or even friends, or worse yet, have nowhere else to go. In each of these cases, if these people had the option to lease a nice house at an affordable price, chances are that they would jump at the opportunity.
This could be a win-win situation for both parties. You get to collect rent on houses you’ve purchased. This can help you to more quickly recover your expenses and even make some profit. The house you rent out will be lived in so your insurance costs will be less. And then when the economy picks up again, you’ll be able to resell the house for an even greater profit.
The feel good part happens on both sides. Families get decent housing at an affordable-for-them price. You might even consider offering your tenants the chance to buy the house when they get back on their feet. Settle on a price and you might not have to even worry about finding a buyer later. Even giving them a great deal you will still be earning far more than what you paid originally, if you think back to the pennies on the dollar price you paid.
By doing this you can be sure of having tenants who’ll take good care of your place because in their minds they might own it one day.
When the day comes where they’re in a position to buy and they’ve shown that they are responsible by paying their rent on time, you could just agree to hold a private mortgage. In this case, they would just keep paying you. That way they won’t have a problem getting a mortgage despite suffering a foreclosure.
If you are thinking that this is a crazy idea and it won’t work, you’d be wrong. That’s because this exact plan has been used by quite a few investors.
In a recent interview, one investor said that it feels good to be able to do what he does because he can help people get a decent place to live. But at the same time, he, as an investor, is making money on rent. And when the right time comes he will make even more money from the sale of the property.
If these investors can do it, how about you? Make money on foreclosures and still sleep at night. What a great concept.
Learn more about buying foreclosure properties and get important tips on how to buy foreclosure property and where to locate listings.
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