Distressed properties refer to foreclosure, short sale and bank owned real estate. Many investors seek out these types of properties because they can be purchased below market value. In today’s market distressed real estate can be an investor’s dream. However, careful consideration should be given before making an offer. Otherwise, these properties could quickly become an investor’s worst nightmare.

Real estate experts proclaim distressed properties could quickly become the next hot investment opportunity. They also warn this type of real estate investment will not create overnight wealth. Instead, buying fixer-upper homes is primarily for investors who prefer slow and steady growth or those who participate in house flipping.

The key to success in this real estate niche is to locate properties that are located in areas where people want to live. With a little work and various upgrades, distressed properties can be used as rental homes, sold as rent-to-own property, or quickly flipped for profit.

Investors who prefer long-term tenants should seek out distressed properties located in family communities. Investors who prefer short-term tenants should look for foreclosure, short sale or bank owned homes located in areas where people enjoy vacationing. The right home located in popular vacation destinations can potentially yield higher profits than long-term housing rentals. Only you can decide if you prefer long- or short-term rental properties.

It is crucial to engage in due diligence prior to investing in distressed properties. Obtain repair estimates through contractors. Determine if any unpaid tax or creditor liens are attached to the property. More important, make certain you can afford the mortgage payment if unable to rent or flip the home.

Foreclosure homes tend to be a riskier investment than bank owned houses. On rare occasions, investors are fortunate enough to locate foreclosure homes in nearly perfect condition. However, most distressed properties require substantial work to return the home to livable condition.

Foreclosure real estate is purchased through public auction. Investors must be capable of obtaining financing if their bid is accepted. In some cases, the previous homeowner continues to reside in the home and investors must engage in eviction. If you do not want to deal with these types of problems, it is better to invest in bank owned properties instead.

If no acceptable bids are placed on foreclosure homes, the properties are returned to the originating mortgage lender. The bank eliminates the mortgage and negotiates with creditors to remove liens. Banks also take care of eviction. Mortgage lenders aren’t notorious for ‘giving away the bank’, so be prepared to engage in multiple counter-offers to obtain the desired price.

A more profitable and less stressful way to purchase bank owned properties is to seek out real estate investors who purchase bank portfolios. Investors who purchase entire portfolios are able to buy distressed properties at wholesale prices. They then pass along a percentage of savings to other investors; creating a win-win situation for all parties involved.

It is not uncommon to purchase bank owned homes through private real estate investors for 60- to 70-cents on the dollar. Even when investors must spend 10- to 15-percent in repairs, they still have accrued equity in the home. In order to triple or quadruple profit margins, real estate experts suggest holding the property for ten years.

There is money to be made by investing in distressed properties, but it is rarely easy or quick. By taking time to make informed decisions, investing in bank owned,  foreclosure and short sale homes can eventually make investors quite wealthy.

Simon Volkov is a successful California real estate investor who specializes in buying and selling distressed properties. Simon offers solutions to homeowners who need to sell their house to stop foreclosure or avoid bankruptcy. He offers multiple investment opportunities to real estate investors via email. If you need to sell your house or are looking for solid investments visit www.SimonVolkov.com today.
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With thousands of foreclosed properties being advertised each passing day, it is extremely important to choose well what to buy, where from who and when.  Here are a number of important things to take into consideration before you finally decide to invest in foreclosed properties:

1. Location

Location, location, location! Yes, location is the most important thing that each and everyone could first consider when buying any kind of property, and so do you when buying foreclosed properties. Location, in most cases will determine the rate of profitability for your property since it determines the selling price in the future when you decide to sell the property. Consider if the place you are going to buy the foreclosed property is a slow growing or quick growing area which can bring you benefits in the future.

Accessibility, availability of utilities and security will also be determined by the setting or rather location of your desired property. The place should be conveniently accessible to churches, hospitals, and markets, grocery stores among other necessary and basic utilities.

2. Property condition

When investing in a foreclosed property, a real property for that matter, then it is important to look for a sound investment, made of durable materials meant to last for quite a long time. It is considerably rare to find foreclosed properties in poor condition but if they need any kind of repairs then make sure that they are made.  Watch out for any termite infestations, water damages or rotting wood. You might need a contractor to check on the physical condition of the place before you make any payments.

3. Selling price

You will make money if you buy the property at a price below the market value. Make sure that you consider other costs like major taxes, because some buyers at times transfer such costs to the buyer. You’d better know this early enough just incase the buyer transfers the payments to you.

4. Seller motivations

Go for a seller who really needs to sell his property as soon as possible-a motivated seller. Banks for instance are motivated sellers though they at times sell their properties below market values. Motivated sellers offer discounts and bidding might just become an option rather than a necessity.

5. Financing

Apart from considering favorable selling prices, it is also important to consider the availability of financing that basically provide flexible payment terms and preferably low mortgage rates.

As much as you are doing a bargaining, it is far much important to consider the period to make your payments, a week for instance or cash payments might not be of help at all, you need enough time to come up with the money.

During the bargaining period, ensure that you get in terms with the interest rates and the period to pay the interest. The rates should be friendly and fair enough; not too high, not too low.

Investing in foreclosed properties can hold a great investment in your life. It can bring you great opportunities for now and for the future. Go for it, don’t waste more time.

Watchforeclosure.com provides Free foreclosure listings of both Bank Owned Properties and Government Foreclosures; make sure you visit our website to get as many options as possible, all in your area!
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