1. Highly motivated sellers. To me, the most important advantage of working in foreclosures is that you deal with homeowners that HAVE to sell, not want to sell. If they don’t sell they will very likely lose their house and get nothing—and they want something after years of living there!
2. Sellers facing time deadline. Generally when you list a piece of property for sale time is your friend: you can afford to wait, three, six, nine months, even more. I have seen houses on the market for close to 2 years. But a foreclosure property typically has 60-90 days before it goes to public trustee sale. And depending on the state law, you’ve got 0 to 360 days before the redemption period ends–the time that the homeowner has to try to buy it back. But, realistically, the homeowner has got no more than 3-6 months to find a solution to their problem.
3. Deep discounts. Foreclosure properties are the best way to consistently find fabulous real estate bargains. You are buying equity at a discount—often at 60-80 cents on the dollar.
4. Low risk. This is simply because you’ve been able to do research, run sales comparables (comps), and evaluate the property. You know approximately what the house is worth.
5. Plenty of leads. There are new leads just about every week, especially with rising foreclosure rates.
6. Little money or no credit required. Simply by finding a buyer on the other end, you can double close on many of these types of deals, so you never have to take out a mortgage for the house you are under contract with.
7. No commissions on the buy side. For the most part, you don’t have to work with real estate professionals when you are buying foreclosures, thus saving thousands of dollars.
8. Few competitors. Few investors enter this area, simply because of FEAR (False Evidence Appearing Real), and because it’s a complicated business. Sure, there are many that try. But few do it as a business full-time.
9. Quick closings. It is possible to buy, sell, and double-close a house within 30 days.
10. Quick growth. You can build a large portfolio of single-family homes very quickly by taking over existing payments.
