Q: Where can I find unbiased instructions, examples, and techniques on how to buy foreclosures?
I own two single-family properties in Boca Raton, Florida, and have about $750,000 in equity. I’d like to move on beyond buying rental property and learn how to approach troubled homeowners and “ethically” buy foreclosures.
A: Over the past five years, I’ve seen dozens, if not hundreds, of books that supposedly offer guidance on how to buy foreclosures. I haven’t been overly impressed with the books I’ve seen and some of them describe activity that I could not recommend to anyone. I don’t think that’s where you want to go.
In my mind, all of these books reflect the heightened interest people have in making millions real estate. There are many more people who are chasing foreclosure fortunes. With so much competition, I’m not sure how easy (or profitable) it will be to break into the business now.
Even some of the pros are having a tough time. Someone I know in the Chicago area who is a foreclosure “professional” (he normally purchases dozens of houses a year) hasn’t bought anything in the past 18 months because he feels the competition has pushed prices up beyond what’s reasonable.
Timing and local market conditions are important. You may want to start learning about foreclosures and in the next 6 to 12 months, think about making a move. Some real estate professionals believe that the number of foreclosures will grow once interest rates adjust on some of the exotic mortgages homeowners have used to finance property they couldn’t really afford.
If you’re keen to get going, I’d find out where the foreclosure notices are published (it’s usually in a court circular or legal newspaper) and get a subscription. You can sign up for electronic foreclosure monitoring services on the web. Peruse the notices, talk to agents that represent bank-owned properties that have been foreclosed upon, and start looking at homes that are going up for auction.
This is a tough business, even if you do it ethically, and it tugs at the heartstrings. Personally, I don’t have the stomach for it, but I wish you luck.