Foreclosures Make It Easy for Investors to Buy Low and Sell High

Many wealthy people have made their millions by investing in real estate. The old adage “buy low and sell high” is what a lot of real estate investors live by. I’ve heard a number of different real estate investors say that you make money in real estate not when you sell it, but when you buy it. This basically means that if you buy at a low enough price it’s nearly impossible not to make a good profit.

A great way for savvy investors to put the buy low sell high method into practice is to invest in foreclosed homes. There are more foreclosures than ever and because of this there are opportunities everywhere for savvy investors to find great properties at bargain prices.

A lot of real estate investors like to look at a bank foreclosure list and see what kind of inventory their local banks are trying to unload. Most people go to a bank to get a home loan so it’s only natural that banks would have a certain number of people default on their loans and that the banks would then have a large inventory of houses that they need to sell. Banks are not in the real estate business. They do not want to become landlords or get into flipping houses. Banks want to have good loans on the books, loans that people make their payments on. Because banks want to have a solid portfolio of good loans on the books and because there are more foreclosures than ever, many banks are willing to accept short sales. This means that banks will actually accept offers that are less than what is owed on the house.

Another way that investors like to find bargain properties is to look for government foreclosed homes. Banks are not the only institutions that make loans for people to buy homes. The Veterans Administration makes loans available to men and women who have served in the armed forces so that they can buy homes, often times with low down payments and very reasonable interest rates. Like any other lender, the Veterans Administration does have people that default on their loans and they do sometimes have to take houses back in foreclosure.

The Veterans Administration is not the only government agency that ends up with foreclosures. A lot of investors like to buy HUD foreclosures. HUD stands for the Department of Housing and Urban Development. The Department of Housing and Urban Development does not make loans directly but they are responsible for overseeing the activities of the FHA or Federal Housing Administration which provides mortgage insurance to approved lenders. If someone has a bank loan that is insured by the FHA and that person then defaults on their loan, and if the property were to go through the entire foreclosure process it would eventually go back to the Department of Housing and Urban Development which would then have the responsibility of selling that house to recoup losses.

The Department of Housing and Urban Development ends up with a lot of foreclosures because the FHA insured loans are usually made with very little down payment money and a lot more flexibility when it comes to buyers qualifying for a loan. The FHA makes buying a home easier for a lot of people but this also makes it easier for people to get in over their heads and lose their homes in foreclosure.

Times are tough for a lot of people and foreclosures are at an all-time high but if you are an investor now is the time to buy. There are more opportunities than ever to find bargain prices and real estate prices will not stay this low forever. Now is one of the best times ever to buy low and sell high.