How To Make Money With Foreclosures And Still Sleep At Night
The old saying that the rich get richer has never been truer than right now. If you have money to invest, you can make a killing in the housing foreclosure market. Some investors look at today’s foreclosure crisis as a huge opportunity. For others, the opportunity that comes at the expense of average, hard working families is a little harder to swallow. If you fall into the second category, here’s how to make money with foreclosures and still sleep at night.
Many of the people who are losing their homes to foreclosure are good people who have been caught up in a bad situation. They may have lost their job because of the downturn in the economy. Then of course there was the debacle of subprime interest rates which led to plunging housing values. As an investor, you need to realize that there is little you can do about this.
But there is a way to help and still turn a profit. Because you are able to buy multiple houses for just pennies on the dollar, you really have very little cash tied up in each house. Keeping that in mind, here’s how to help.
Purchasing a number of houses in a community will give you a few options. One thing you could do is to find another investor and sell the properties in bulk for a profit. Another thing you could do is to just sit on the houses until the housing crisis passes and the market rebounds and then sell for a profit. The third thing you could do would be to rent out those houses.
People who lose their homes to foreclosure are, sooner or later, forced to move. Usually they either move to a rental unit, move in with other family members or friends, or worse, have nowhere to go. In each of these scenarios, if they had the option to rent a nice house for an affordable price, chances are they’d jump at the opportunity.
This could be a real win-win situation. You will be able to rent out houses you’ve purchased so you’ll recover your expenses and even make a profit. The house will be lived in so insurance costs will be less. When the economy picks up, you can resell for even greater profit.
The feel good part is that you are enabling families to have decent housing at an affordable price. You could even offer your tenants first chance to purchase when they get back on their feet at an agreed upon price. Even if you give them a good deal it will still be far more than you originally paid. Remember your pennies on the dollar price?
For practical purposes, this is a good idea. If your tenants know that they may one day own the house, they will be more likely to take good care of it.
When the day arrives where they are in a financial position to buy, you may want to think about holding a private mortgage. If they have been able to make their rental payments on time you could just continue with the arrangement where they are still paying you. That way there won’t be any problems with them getting a mortgage because they had a foreclosure.
You may be reading this and thinking it’s a crazy idea that couldn’t possibly work. But you’d be wrong. This plan has actually been implemented by a few savvy investors already.
In an interview, one investor stated that he feels good about what he’s doing because he’s able to help people have a decent place to live. At the same time, he’s making money on the rent and when the time comes he’ll make even more from the sale of the property.
These investors have found out how to make money with foreclosures and still sleep at night. How about you?
Learn more about buying foreclosure properties and get important tips on how to buy foreclosure property and where to find listings.