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An Educated Investor is a Smart Investor
By David Offut, Exit Realty Plus
As a real estate broker and investor, I know how important it is to have a
finger on the pulse of the investment market - especially when it comes to
investing in foreclosed properties. Knowing the foreclosure process inside
and out is very important, especially knowing how foreclosure laws differ
from state to state. The more I educate myself, the more I can educate my
clients and help them make profitable investments. The more they exhibit
confidence in me, the more able I am to demonstrate my knowledge without
overwhelming them with too much information.
Recently, I looked at a 3-family in Brockton that was in foreclosure. At
first glance, it looked like a great deal for one of my clients. As I dug
deeper, keeping a sharp eye out for danger signs, it became fairly evident
that this property wasn't likely to yield a great profit. Tenants were
going to have to be removed, which is an expensive process and wasn't
going to be easy. Unless you know from personal experience or have
learned about tenant removal through courses run by industry experts, few
anticipate how difficult a process this can be. I told my client to walk
away.
Due diligence is a very important step in acquiring a foreclosed property.
Other clients of mine were so excited to find a single-family home in a
desirable area of Canton for short money that they wanted to buy the
property immediately. They were afraid they were going to lose it if they
didn't act quickly. I cautioned them against jumping in too quickly
without doing their due diligence. Reluctantly, they went through the
process of having the home inspected. What we uncovered were rodents -
lots of them. Easy to fix? One might think so, but in this particular
case, all of the floors would have had to be ripped up and replaced. Sure,
my clients were disappointed not to get the property, but it was the right
decision to walk away.
There are so many components involved when buying foreclosed property. It
is a much more complicated process than buying a regular piece of real
estate, but it can be much more profitable. You have to be careful since
so much is unknown and time is short. It is important to get your data
early. Contacting the homeowner can be not only a tricky, but a sensitive
situation. What works and what doesn't? When you finally find the perfect
deal, you have to know how to make it work for all parties involved,
including the bank or investor. Many people go into a deal unprepared and
find out that they can't carry the property. How do you know if the
numbers work? A lot of strategy is involved when making investments. As
Kenny Rogers says, "You have to know when to hold them and know when to
fold them." So, when do you flip a property and how? What are the tax
implications? These are just some of so many questions one has to ask when
getting started in foreclosures.
* Next 37 17 investors only!
Having good business sense is crucial. Knowing the right people to talk
to also makes a big difference. Although there is so much involved in
foreclosure investing, it can and has been done profitably. I've done it.
If you'd like to learn more about how to see a deal through to the end, I
invite you to join us on July 23rd for a full day seminar on Opening the Door to Profit
and learn first hand how I opened the door.
David Offut is the principal of Exit Realty Plus in Brockton. You can
reach David at 508-942-4110 or visit his website at askdavid.net.
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