What they say about the rich getting richer is especially true right now. With money to invest you can make a fortune in the foreclosure market. Some investors see the foreclosure crisis as a huge opportunity. Other investors have a little more trouble with the idea of profiting from someone elses misfortune. If you find the idea of making money this way distasteful, there is a way for you to make money with foreclosures and still sleep at night. Here’s how to do that.
Most people who lose their homes to foreclosure have been caught in a bad situation. Think about the reasons for foreclosure; job cuts, the subprime interest mess, the fact that housing values have plummeted. There’s not much you can do about any of this, as an investor.
But there is a way to help and still turn a profit. Because you are able to buy multiple houses for just pennies on the dollar, you really have very little cash tied up in each house. Keeping that in mind, here’s how to help.
If you buy a number of houses in a single community, you will have several options. One option is to sell them in bulk to another investor for a markup. A second option is to hold onto them until the housing market starts to pick up again then sell them and make a nice profit. The third option is to rent out the houses.
When people lose their homes in the foreclosure process, they have to move out at some point. When this happens they are forced to try to find a rental, move into the home of a family member or friend, or worse yet have nowhere they can go. None of these scenarios are ideal, especially if there are children involved. A better option for them would be to rent a house at a price they could afford.
This could be a real win-win situation. You will be able to rent out houses you’ve purchased so you’ll recover your expenses and even make a profit. The house will be lived in so insurance costs will be less. When the economy picks up, you can resell for even greater profit.
The other part is that families will have nice places to live in for a cost they can afford. Why not give your tenants first offer to purchase at a guaranteed price once their financial situation improves. The price will be more than you paid at pennies on the dollar but still a deal for them.
If you do this, it is far more likely that your tenants will take good care of the property since one day they may be the owners.
When the time comes that they are financially able to purchase, you could even consider holding a private mortgage. As long as the rent has been paid on time, why not continue to collect money? It may be difficult for them to get a mortgage after suffering a foreclosure so a private mortgage may be the answer and that way you still technically own the property.
Now if you are reading this and thinking it’s an off the wall idea, think again. There are more than a few investors who are currently doing this.
In a recent interview, one of those investors said that he feels good being able to help people who have lost their homes through foreclosure. They get a good place to live and raise their family and he gets rent money with more to come when he sells the property.
These investors have found out how to make money with foreclosures and still sleep at night. How about you?
Learn more about buying foreclosure properties and get helpful tips on how to buy foreclosure property and where to locate listings.