- January 10, 2018
- Blog , Real Estate
Pre-foreclosure real estate is a hot commodity, and investing in one could yield some really good returns. Many investors, however, have little to no knowledge about pre-foreclosures and how they work, which could be a hurdle in finding the right real estate investment opportunities in USA. If you are planning to invest in a pre-foreclosure property, here’s a step-by-step guide to help you get started. Read on.
Step 1 – Understand what’s a pre-foreclosure property
A pre-foreclosure property is a home that is not foreclosed yet and the seller is under mortgage payment debt. If the seller doesn’t make up the payment, the home will be seized by the lender or bank. In some cases, a formal foreclosure notice isn’t filed in the public record, but a notice of default is made a public record.
Step 2 – Find a pre-foreclosure property
To buy a pre-foreclosure property, you need to have updated information about such homes and act quickly to get in touch with the owner. You can find listings of pre-foreclosure properties online and in newspapers. When you come across such a property, it is better to drive by to get an idea of its condition and the surrounding homes in the neighborhood.
Also Read : 5 Tips to Get Started with Real Estate Investments
Step 3 – Confirm the pre-foreclosure status
The owner of a property that is in the pre-foreclosure stage has a minimum time of 2-3 months to pay off the debt to re-claim the ownership. It is, therefore, recommended that you find out if the property is reinstated before attempting to move forward with the buying process. Call the attorney or trustee who is assigned to the foreclosure to get an update.
Step 4 – Evaluate the property
You must check the public records to find out the outstanding liens and loan balance amount on the property. Minus this cost from the estimated value of the property, to find out if it is worth investing in the deal. Some other factors to consider include real estate appreciation in the region and the potential that property holds in the long run.
Step 5 – Make a purchase agreement
After the valuation and negotiation part is over, write a purchase agreement to formalize the deal. You can seek the help of a real estate agent to make the formal agreement.
Wrapping Up
Buying a pre-foreclosure property is unlike buying a foreclosure, and if you are a first-time buyer, it is better to seek the help of an expert. Fig Tree Capital Ventures specializes in the acquisition, development and management of pre-foreclosure real estate assets. We can help you in creating a real estate based portfolio with potentially high-yield direct investment options, two year exit strategy and potentially around 8-12 percent annual cash flow yield. For details, call (866) 300-2170
Also Read: 5 Risks of Real Estate Investments and How to Avoid Them
