6 Ways To Invest In Foreclosures And Earn Money

1. Buy and Hold

This is the strategy of an individual who buys a foreclosed property and holds on thereto until its market price appreciates. In a nutshell.

• Selling the property for a profit. This assumes in fact that the market price has indeed increased. Most of the time, however, it might take several years for a property to understand in value, and therefore the cost of maintaining it, taxes, etc. 
• Refinancing the loan to convert the owner’s equity into cash*. Equity is the difference between the current appraised value and the loan principal balance. When the appraised value increases, the equity increases as well. To live the equity, one can get a replacement appraisal from another bank that reflects the increased market price of a property, then a replacement, and a larger loan is secured based on this new appraisal.

2. Rentals (with positive cash flow!)

Buy a property, apply minor cosmetic changes sort of a fresh coat of paint and have it ready for occupancy, then rent it out. At the very least, when buying a foreclosed property, the numbers should add such how that if you switch it into a rental property, it can generate positive cash flow.

You basically make money through the rent your tenants pay you on a monthly basis and this should more than cover all expenses like amortization, taxes, insurance, etc. This should produce a nice steady positive cash flow every month. I personally don’t take a re-evaluation at a property if it won’t be profitable if I rent it out as this is often my last exit strategy.


3. Rent-to-own

With rent-to-own (which is more appropriately called a lease with an option to purchase), you give tenants the right to purchase the property for a certain amount, which is often called a downpayment. Tenants who become buyers still pay on a monthly basis but rather than paying rent, they're actually paying for the property through monthly installments.

 4. Flipping

Flipping is completed when one buys a property and sells it quickly for a profit. The best flipping method is once you buy a foreclosed property today, but already sold it yesterday. How, you ask? Sometimes one may have already got an agreement with a buyer that he will buy a property before you've got actually bought it.

5. Wholesaling

Wholesaling is buying a property way below market price then selling it for a price slightly higher, often to other land investors engaged in rehab. Profits aren't as big as profits from rehabbing because obviously the buyers would wish to shop for at a price with room for them to form money also.

Some say this strategy may be a good way to form quick cash and is way less risky and beginning investors should seriously think about using this strategy when getting started. You just have to be good at spotting diamonds in the rough, so to speak.

6. Pre-foreclosures

This is when a landowner is facing foreclosure and an investor would help stop the foreclosure by buying the property, which is usually the last recourse to avoid the foreclosure because the proceeds of the sale shall be wont to have the mortgage fully paid. The seller often sells the property at a really low asking price, usually for what he owes plus a touch cash, just to urge the property sold as fast as possible. In these situations, an investor should never cash in of the seller’s misfortune and will offer a win-win solution for everybody.