Everyone dreams of making their fortune in one way or another. Each person must find what works for them as they begin realizing that dream. The problem is that most people remain trapped in the work-a-day world because they are afraid of embarking upon an uncertain journey that just might lead them to true success. At the same time, there are some that throw caution to the wind and jump right not understanding the risks involved with scattering their talents anywhere and everywhere without properly managing those risks.

You would have had to be living in isolation for the past couple of decades not to be aware of how the real estate market was impacted by all the foreclosures. Since then, we have seen a dramatic improvement in that market, but there are still some great real estate investing deals to be had if you know how to find them.

Something needs to be cleared up before going any further. A lot of people interested in buying real estate for profit think that foreclosures are all the same. This is simply not true because there are a number of stages to the foreclosure process and each one has its own set of pros and cons. However, the primary difference between them involves the control homeowners have during any particular stage.

You see, when homeowners are merely in default, there are no restrictions they must deal with if they want to sell the property. On the other hand, once lenders take control of the property, buying real estate gets a little more complicated. Under the right circumstances, you can actually do quite well picking up foreclosure deals even though there are not as many now as there were just a few years ago.

Following is some information to help you determine if real estate investing with foreclosures is the right first step as you begin your journey to greater financial security.


You read that right, there is a pre-foreclosure stage. This is the stage when homeowners are behind on mortgage payments and could catch up if they wanted. However, some homeowners who are up to four months in arrears may not be able to do that. For instance, a lost job, illness or other unfortunate circumstance could make it impossible to catch up on back payments. At this point, it might be in the homeowner’s best interest to sell the property without taking a loss or damaging their credit any further.

Lists of pre-foreclosures are available from a variety of sources and leads are often posted in 30 day increments. The best part of all is that when you are dealing directly with a homeowner you will probably make it through the buying process more smoothly.

Short Sale

For a short sale to work, the lender must agree to take less than what is actually owed on the property. This is a good alternative for lenders who are faced with the problem of homeowners that have stopped making payments because they will take a loss unless they can unload the property. Homeowners benefit as well in that they will not take as bad a hit on their credit. It can take as much as ten years to recover from a foreclosure, but just a couple when it comes to a short sale. Of course, this depends on the entirety of someone’s credit profile.

Buyers interested in real estate investing can enjoy getting a small discount on a property without having to jump through a lot of hoops by taking advantage of short sales. Nevertheless, buyers must be approved and the process generally has a shorter timeframe than with buying a foreclosure.


Real estate auctions offer a unique way of buying real estate for those interested in purchasing foreclosures. It is important, if you want to prosper with real estate investing in this manner, that you understand the specific regulations and rules that pertain to this process. Just remember, unless you intend to remain invested in one state, that you must acquaint yourself with the requirements for each state where you are interested in buying real estate.

Auctions offer a bit of excitement because you are never certain about whether or not you are going to succeed in purchasing a property or how high your bid should be. Still, there is usually a minimum bid to must be met before you’re allowed to be entered into the running. Houses purchased at auction can be a real bargain, but that can also mean they need a good amount of repairs before you can realize a profit.

One of the most outstanding downsides to buying foreclosures is that you will likely not be able to see inside the home before investing in it, and often they are bought sight unseen. That means the bargain may just cost more than it is worth. Real estate investing requires weighing the risks and possible rewards to make sure you are willing to take the chance and don’t get so caught up in the excitement that you forget to bid responsibly.

Real Estate Owned Properties

Real estate owned, or REO properties are those that have been taken back into the possession of the lender and will not go through foreclosure. The good news here is that lenders typically don’t want to engage in property management. They prefer to get such assets off their books. Local real estate agencies are often charged with the work of marketing and selling REO properties and that means they will get a percentage of the sale. That along with open competition results in a reduction of the discount you might otherwise enjoy.

Even so, good deals can be found to start or build real estate investing income with REO properties even if the discount is not as deep as might otherwise be available. The advantage to buying through this avenue is the assurance that there is no cloud on the title. It might take some digging, but it’s possible to locate the right properties to add to your real estate investing strategies in this manner.

Persistence, patience and knowledge are your best friends if you are sure you want to secure your future and live out your dreams building your fortune buying real estate.

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