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Home Foreclosures

Foreclosure

Starting your own home foreclosure business

Most financial advisors agree that there is money to be made out of buying and reselling home foreclosures. At the same time, there are lots of people who make money out of telling other people that they can make money out of foreclosures. There are no short-cuts in the foreclosures business - making money requires hard work, patience and shrewd investment.

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If you are serious about setting up a home foreclosures business, start by researching the laws that govern property sales, foreclosure and finance in your state. Visit the local bookshop and look for titles that deal specifically with the law. Self-help titles that promise to help you get rich from foreclosures can also be useful, but remember that one way the author got rich was by selling books to would-be investors.

You will also need large amounts of investment capital. Ideally, you should have enough cash to buy investment properties outright. This is essential if you plan to buy properties at auction or directly from homeowners. You may need to make special arrangements with your bank in order to make large cash purchases.

If you plan to use finance to pay for foreclosure properties, make sure that you can comfortably cover both the new repayments and repayments on any existing loans. Otherwise, you could end up facing foreclosure yourself. Never refinance your home to obtain investment capital - if anything goes wrong, you could lose your own home as well as the new property.

You will also need to research the different ways to find and purchase foreclosure properties. Decide at the outset whether you want to buy pre-foreclosure homes, foreclosures sold at auction or REO's (Real Estate-Owned properties). Pre-foreclosure sales offer the highest returns but you must deal with the previous owners directly. Auctions also offer decent profits, but the risks are high. Returns are lower from REO's, but financing is usually available and there is much more financial security.

Many foreclosure websites offer courses which help you through the basics of setting up a foreclosure business. Some are useful, others just teach you things you can find out for free on the web. Shop around before deciding on a course and try to obtain testimonials from former participants. One organization that gets good reports is Foreclosures.com (http://www.foreclosures.com).