Investment book

With all the stories of people making tremendous amounts of money in real estate it's no wonder why so many are looking at real estate as an investment vehicle. It offers more security than the stock market, provides great potential returns, offers tax benefits and let's not forget; it sounds cool to be 'in real estate'. Everybody can buy and sell stocks from their phone or computer these days. But real estate, now that's something else.
One of the challenges that many are faced with is putting up the money to acquire a piece of property. Although in reality this is usually not the biggest obstacle. You might say "Hey, what do you mean, not an obstacle. I would love to invest in real estate, but I just can't afford to!" The point is that hardly anyone who buys a piece of real estate has enough money in their account to pay for it. That's where your banker comes in. Let's face it. Do you know anyone that owns their own home? I mean truly own it? Probably not. Sure, you know a lot of people who have a house to their name, but wait until they get behind on their monthly mortgage payments and you will soon find out who really owns their house. That's right, the bank. So if these people can use the bank's money to buy a house, why can't you? Now 'owning' your own home may sound like a somewhat obvious way to get started in real estate, but it is also a very good way to do so. You might say "Duh..." But apparently this little step is overlooked by a lot of people. Just take a look at how many people are still renting a property instead of buying one. Now of course the relation between rent and housing prices varies from country to country and even from area to area. But wherever you go you will still find people renting, because in their mind "they don't have enough money to buy a house." In reality it would be much cheaper for them to buy!

Loan foreclosures on real estate property provide a multitude of opportunities and challenges to a real estate investor. When a homeowner faces default on their loan and the possibility of a foreclosure by the loan holder, an investor has an opportunity to help the homeowner out of their problem and to make a profit at the same time.
No foreclosure situation proceeds identically. Large books have been written that cover the wide range of problems and solutions, but for the sake of this short article everything will be kept simple.
Homeowners miss loan payment for a variety of reasons, and when a homeowner has been delinquent on their payment for a number of months the loan holder, most commonly a bank, will issue a Notice of Default. The Notice tells the homeowner how much they owe in missed payments plus how much they owe in attorney fees and other penalties. The Notice also gives the homeowner a time period to be able to pay all that is owed and bring the loan back to good standing. If the homeowner can't pay all that is owed, then the bank has the right to insist that the homeowner vacate the property and the bank can then put the property up for sale or auction.
During this period of time between the Notice and the foreclosure sale, often called the pre-foreclosure period, the homeowner has the option to sell the property and to use the proceeds to pay off the arrears that are owed. This pre-foreclosure period is also a time when a resourceful real estate investor has the best opportunity to help the homeowner with their problem. However, the homeowner who is in default and the investor have to find each other.
Since the Notice of Default is a recorded document and is made public, the investor can often view the Notice shortly after it is recorded. In most states and counties the Recorder's office makes the Notice public by posting it at the local courthouse or by posting it on their website.
The investor will generally find the Notice on the Internet and then contact the homeowner. Through a combination of letters, postcards, phone calls, and home visits, the investor introduces himself or herself to the homeowner and suggests some courses of action.
Often the investor can take over the property and the responsibility for the loan by offering a reduced sales price or by taking over the loan altogether. This allows the homeowner to leave the property and the problems behind while the investor deals with them. The advantage to the homeowner is that they can avoid having a property foreclosure on their record, which would damage their credit score and their chances to purchase property in the future. In exchange the homeowner will generally willingly give up a large part, even all, of the equity that they had in the property.

Now the investor has an opportunity to make a profit if sufficient equity has been left in the property for him to make arrangements. For example, the investor may be able to pay off the arrears, fix up the property, and sell it for a profit. That takes a fair amount of time and resources. The investor could also pass the deal along to an investor who specializes in fixing up properties and take a small but quick profit. Or the investor could sell the property at an attractive discount before the property goes to the foreclosure sale and make a profit without putting much of his own money into the transaction.
If there is not sufficient equity in the property for the above solutions to work, then the investor could negotiate with the bank to reduce the outstanding loan balance in exchange for a quick sale. That would save the bank from having to foreclose on the property and having the property become part of the bank's non-producing inventory for an uncomfortable period of time. This solution gives the investor the necessary equity to be able to make a profit.
There are numerous other scenarios, complications, and solutions, but this article has highlighted several of the more typical and common situations. In the transactions discussed here the homeowner benefits by being able to escape a damaging foreclosure and the real estate investor benefits by being able to make a profit on his/her investment of time and resources.

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