In today’s market you can find an astonishing number of investment offers. Depending on your personal situation, you can have different reasons why you want to invest. It can be to earn additional income, capital growth, retirement or to set up a college fund for the children. But it will in all cases be basically the same: have your money making more money for you without too much hassle. Therefore real estate is a good option. Later in this article I will go in more detail about selecting foreclosure as your ideal vehicle.

With real estate you can choose for the short term or long term, that is up to you. But the most people prefer for the long term. In some cases you may get identified by the IRS not as an investor, but as a realtor. Don’t hesitate to contact your tax advisor to learn about all the details when you want to choose for the short term option. You definitely don’t want to find any surprises in the mail. A friend of mine bought a house cheap at an auction. He is a guy who knows how to use tools, so he fixed it up and sold at three times the purchase price. For him this was a great return on his money. It cost him about a year to get all the work done. He was smart enough to reinvest the money to buy two other distressed houses, and after the sale he had doubled his money.

If you want to get into real estate investing for the long haul, you can buy up properties to rent out to others. You run a bit more risk this way, as you have to worry about having tenants in your properties on a fairly regular basis, and you do have property depreciation to think about. You also have regular maintenance costs. However, if you have the right amount of properties, this type of real estate investing can really pay off in the long run. Some find that if they have enough properties, they can often retire early with a good amount from rentals on top of other types of investments.

It is up to you to make a decision with how much you want to get started. Either you use only your own money or go for a loan at your bank. The bank will look how much risk you are willing to take and what you expect from her. It all depends what you are planning to do. Just flip it within a short period or rent it out. The first option will require more money of yourself then the second option. But whatever happens with the economy, people will always need a roof above their heads.

That brings us to the option of buying a foreclosure. In many cases this can be a very lucrative business. When being at the right place at the right moment, you can buy at half price. The number of foreclosures is still on the rise in the US, mainly because the worse economic condition that we are facing at the moment. Last year more then one million families faced a foreclosure.

The process of foreclosure consists of thee phases. It is important to know them so you can act in time. These phases are:

1. Pre-foreclosure
2. Auction
3. REO

If the house owner misses more then three monthly payments, most banks start to take steps. But some of them can wait up till six months. That is determined by the policy of the bank and the payment history of their client. The bank will go to the county office to register the notice of default. This document is then official announcement that the borrower is late with his payments. With this act the reinstatement period starts and ends in many cases one week before the sale of the property. Of course when the borrower comes up the money in that period, the sale will be cancelled. But otherwise a foreclosure date is also set. This date has must also be entered in the records of the county office and will appear in the local newspapers.

The county courthouse is the designated place for the auction of a foreclosure. The bidding starts at an amount that is equal to the accrued interest, the loan balance and any additional fees. When there are no buyers at that price, then the attorney of the bank who conducts the sale, will buy the house.

A REO or Real Estate Owned is a property that the bank bought because there were no bidders at the opening price. They perceived value of the property is too low compared with the debt. But it can be that you have a client who is right for the property, so it could be worth much more to you. Buy it by contacting the attorney or the bank a couple of days after the auction.

Also another advantage of buying a foreclosure is that all junior liens except property taxes are removed. The priority of liens is determined by the date of recording. When you purchase a REO also known as a Bank REO, you will typically receive the property with a clean title.

Want to find out more about finding people who want to sell their property, then visit Marcel Bongers’s site on how to choose the best foreclosure for your needs.

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