Article by Peter Wolfing
Foreclosures
Although there is less liquidity with real estate, some folks prefer what they can see, touch and feel. As in most areas of life decisions are made with facts. They are confirmed with emotion. One way to have tangible property earning residual income is through foreclosures.
Foreclosure is simply what happens when you don?t pay your bills on your mortgage. The lenders want their money and they take actions to get it, often by selling the house.
My number one recommendation in this area is to THINK, RESEARCH AND BE KNOWLEDGEABLE before you act! Go to seminars. Read books. Visit web sites. Attend auctions. Talk to professionals. Join investment clubs. Become as knowledgeable as possible before you decide to act!
Most of the homework you need to do is at your local level. What are the tenant-landlord laws? What rules apply for late payment and eviction? Are there rent controls? Look up on the Internet to get a hold of local landlord and real estate specialty interest groups. Foreclosure law is formulated at the state level. Since each state has unique laws and time lines, you must read up and ask! Some states have mortgages. Some have deeds of trust.
The foreclosure process goes through 3 distinct phases:
1. Pre-foreclosure2. Foreclosure at auction3. Post-foreclosure (the property goes back on the books with the lender. The lender wants cash not property.)
In order to make money this way, you need to know about the foreclosures BEFORE they become public knowledge. FIRST COME, FIRST SERVE! BE THE FIRST TO LEARN AND ACT!
Non-payment for 2 or 3 months gets the foreclosure ball rolling. Letters start arriving from the bank. Then handed over to an attorney (4 to 6 week period), who will send further letters to the owners suggesting a cure date. Cure date is the latest date problems can be cleared up by before the foreclosure sale.
The earlier in the process you can intervene, the greater your leverage. Leverage means taking a small amount and using it to do big things. You?re saving the owner?s face and credit and getting a good deal in the process. More legwork here, but greater leverage! Keep in mind that you did not create the situation, but you can provide a win/win solution. MY PREFERENCE is to enter into the process before that cure date or after auction (REOs).
There are differing laws and procedures between states, and even between counties in the same state. In general, states differentiate according to the security instrument(s) used to establish financing and legal status. There are two categories of security instruments: 1) mortgage, and 2) deed of trust. Methods of foreclosure where mortgages are the security instruments include judicial, non-judicial, or power of sale, and entry and possession. The method of foreclosure where a deed of trust is the security instrument is almost exclusively power of sale (in Utah, trust deeds are combined with a judicial process).
I hope you enjoyed this blog article.
To your financial success,
Peter Wolfing
About the Author
Peter is a master marketer online and have over 20 years experience online. He has created dozens of sites and products and has helped over 300,000 people reach their online goals with innovative software, websites and systems that help people grow online faster, cheaper and more productive than ever. His latest release is http://www.blogtoolbox.com which is a free blog system with top wordpress plug-ins and templates to get you started on your road to success. Peter can be reached at support@blogtoolbox.com
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