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Article of the Month for July 2004 Printer friendly version

Requisites For Acquiring Foreclosures

by Ward Hanigan

It's unfortunate that there is so much competition amongst lecturers on the real estate circuit these days. They feel forced to pretend that, if armed with their unique set of books and tapes, that anyone can succeed with " . . no money, no knowledge, and no time".

Such is not the case in real estate investing in general, and it's especially not the case in the successful pursuit of foreclosures, which unequivocally demands three main requirements:

  1. MONEY - Depending on the county, you will need approximately $75,000 to $100,000 dollars CASH, on average, to cover:
    1. Your winning sale bid at the trustee's sale,
    2. Legal fees for the occasional unlawful detainer action a stubborn holdover tenant/owner will force,
    3. Reinstatement amounts for delinquent payments, late charges, penalties, advances, etc. on the remaining senior financing,
    4. Rehab expenses to put the property in shape for resale, refinancing, etc.
    5. Holding expenses you will bear each month before you can complete your resale or lease/option, etc.

  2. KNOWLEDGE - To find the best deals you will want to search through many (100 or more) foreclosure prospects every month. At that rate you won't be able to afford any outside title protection or service. Thus, at a minimum, you will have to be as competent as a title company searcher, and at best, the equivalent of a title officer as you plow through the document rolls at the County Recorder's office.

  3. TIME - Your most precious commodity will be time! You will need at least 40 business hours per week to cover just a portion of the whole county area. All of the essential services you will need (e.g. recorder's records, title company help, etc.) are only available during the day, plus most trustee's sales are at mid-day, and daytime is the best time to view property. And of course, once you buy a foreclosure there are all kinds of things you will need to do during the day to see it through to its speediest, most successful conclusion.

Your chance for success really jumps too if you can go at it with enthusiasm right from the start rather than having to sandwich it into your spare time. If you're detail oriented, organized, a self-starter with a high self-image/confidence level and enjoy puzzles you'll love this business and will prosper accordingly. By the same token you'll feel the struggle a lot more if you have an opposite mindset.

Information provided by this website is for informational purposes only and is not a substitute for professional advice. Please consult your investment advisor and/or attorney before entering into any transaction. Read our privacy policy.

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