Foreclosures experienced a
startling rise this year—up 72
percent since the beginning of
2006. The increasing foreclosure
rate is unveiling a different
breed of real estate “flipper”
looking to turn a profit on
investment property purchased up
to 20 percent below market
value.
In the
midst of a slowing real estate
market, rising interest rates
and salaries that are not
keeping pace with standard of
living increases, we have seen a
dramatic increase in
foreclosures nationwide. This is
not great news; however it does
create opportunities for savvy
investors looking to obtain
properties at below market
value. The foreclosure-investing
process can be risky, a great
deal of research should be done
to ensure that the investment is
sound and clear of additional
encumbrances that could affect
the deal.
Information about foreclosure
properties is found in many
places including foreclosure
websites, legitimate third-party
foreclosure listings,
educational websites, private
banks, auction houses, and local
tax-collection agencies. The
number of foreclosure listings
increases every day, with the
rise forecasted to continue.
Foreclosures are non-traditional
investment options that can
provide profitable rewards when
proper research is conducted.
More
foreclosures emerge as interest
rates climb and the 30 percent
of loans that were originated
with adjustable-rate mortgages
significantly increase. Those
faced with increasing mortgage
payments are attempting to
liquidate in a market where
housing inventory is increasing
and the buyer pool is shrinking.
The softening market and the
rise in interest rates and
accompanying payments may spell
disaster for many people who
could be forced to sell at a
loss out of necessity. Yet, as
with most cases in investing,
one individual’s loss is
another’s gain.
As homes
become available at up to 20
percent below market value,
large profits can be realized by
investors. As the real estate
market shifts gears, a growing
number of investors are learning
that they can utilize their IRA
or 401(k) funds to make these
types of investments. Based on
IRS law [IRC § 401 (M)] it is
perfectly legal to use
retirement dollars for these and
many other types of investments
within an IRA – all that is
needed is someone to setup the
structure to do so. Once the
structure is established,
investors can gain checkbook
control of their retirement
funds and begin making
investments that yield higher
and more secure returns than
those typically yielded within
the stock market.
