Foreclosures have been around forever, only now there just more of them (a lot more). Seasoned and novice investors want to invest in foreclosures now.
In 2004 the number of foreclosures was 2% of the total sales in the US. In the first quarter of 2008 foreclosures accounted for 30% of the total sale. During the first quarter of 2008 in Stockton CA 72% of its sales was in foreclosure. In Las Vegas in the first quarter of 2008 45% of property closed was in foreclosure. So you can see why there is so much interest in foreclosures.
Now the reason why they (foreclosures) are so attractive is because if you are going to be successful in real estate investing you need to work with a motivated seller. And their aren’t any more motivated sellers than those who are going to lose their home because they can’t make the payment.
Prior to this point foreclosures where typically as a result of divorce, unemployment and medical bills. In addition to these recurring reasons today it’s also a result of the ARM (adjustable rate mortgage) been set from a low interest rate to a high interest rate making the payment higher and maybe unaffordable for the home owner and property value dropping and leaving no equity.
So why invest in foreclosures? Simply, foreclosures are at a all time high. Which gives you a outstanding opportunity. High instant profit margin for the well trained investor. You can buy at a steep discount in many cases. Finding great discounts are up because borrows are defaulting on their subprime loans. ARMs are resetting to higher percentages,fallen property values, balloon notes becoming due, unstable money markets and security markets causing financial losses in uncertian economy which leads to layoffs. There is always a steady inventory of new property. Foreclosures are really not understood very well. Some property can be purchased with little of your on money. Plus, banks don’t want these properties so they want to get rid of them as quickly as possible.
This information will get you started. I hope you found this helpful.
Earnest
