The collapsing real estate market is creating some exciting
new opportunities in real estate for savvy investors not
afraid to capitalize on a new opportunity. When real
estate was hot and the market was rising, and interest
rates were stable, millions of Americans opted to roll the
dice on adjustable-rate mortgages. Now the market has
tanked, and so many have lost their bet, rates are
resetting and hundreds of thousands of mortgages are in
jeopardy. A lot of these property owners have become
subprime risks, and as a result are unable to refinance.
Facing payments they can't make, some are simply walking
away from their properties. This is bad for the homeowner,
but for investors it's an once-in-a-lifetime opportunity.
When I mention the phrase "walking away from their
property", I literally mean homeowners are abandoning their
property. When abandoned property is mentioned, the mental
image that comes to mind is typically a dump somewhere in
the ghetto, with boarded up windows, and junk strewn about
the yard. This is a classic example of an abandoned
property, but it's also somewhat antiquated.
In 2007, an abandoned property can be a half million dollar
home in a very good neighborhood. If the owners can't make
payments, rather than face the indignity or the
embarrassment of foreclosure, many of them pack their
belongings into a U-Haul truck and drive away hoping to
avoid the problem altogether. The home owner then mails
the keys to the bank. Banks call this "Jingle Mail".
As a savvy real estate investor, you can cash in on this
opportunity by locating a well-qualified abandoned
property, tracking down the owner, and convincing them to
sell to you.
It's not as difficult as it seems.
The best place to locate abandoned property that might fit
your investment criteria is in middle or upper middle class
neighborhoods. Good signs of abandonment are properties
that are obviously vacant, as well as overgrown with weeds
or covered with unshoveled snow. These properties may have
newspapers piled up on the porch, and may be showing some
signs of distress.
If you simply drive your target neighborhoods you'll locate
possible abandoned properties. You won't know for sure
it's been abandoned until you investigate the property a
little more closely. A good place to start is with the
next-door neighbor.
When you approach the neighbor, be certain to point out
that you're a real estate investor and that you're possibly
interested in purchasing the property. A little
questioning at this point will tell you whether the
property might be worth your time, as well as your effort,
in tracking down the owner and trying to purchase it.
While there are a rising number of abandoned properties, it
can sometimes be a bit of a challenge locating the owner.
These properties lend themselves very well toward creative
financing techniques because the owners are extremely
distressed from a financial standpoint. In situations
where the owner has simply walked away from the property,
monthly mortgage payments are coming due like clockwork on
the first of every month, and whether they're aware of it
or not, the owner is still on the hook. In addition,
property taxes and insurance premiums still have to be
paid. Long story short, this property is a major headache
for the owner.
If the owners aren't making their payments, eventually the
bank is going to foreclose on the property, and take it
back as an REO. If this happens, a major headache for the
property owner becomes an Excedrin headache for the bank.
Your greatest potential for large profits is before the
bank forecloses, so you want to reach the owner before the
bank does.
Next month in Part II, I'm going to explain to you how to
go about locating the owners of these abandoned properties,
so you can take advantage of this unprecedented opportunity
to explode your net worth.
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Mike Lautensack is a real estate entrepreneur and creator
of the Private Lender PowerPoint Presentation Kit. This kit
is loaded with tools and techniques to attract a consistent
stream of private investors. To learn more about this
powerful step-by-step kit go to
http://realestatewealthtoday.com/page2.html
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