Because of this sub-prime mess and all of the foreclosures in this nation…should I be focusing on foreclosures only? This sounds like a dream come true for an investor. I wanted to learn subject to purchasing, but I just keep hearing about all of the foreclosures that are occurring across the US.
Would the foreclosure area be the best bet for the new investor?
Thank you for your time.
It is very difficult to be successful in this busines if you only know one small part of the business - like foreclosures. Yes, there are a lot of foreclosures out there, but lenders in many areas are trying to get close to retail price for these properties.
Subject-to purchasing offers the same problem. The subset of good deals that can be purchased subject to the existing financing is very small, so only doing sub-2 deals will really cut down on the number of good deals you will get. In addition, there really is not more than 5 minutes worth of information to learn on subject-to (although some gurus can turn that into a multi-thousand dollar bootcamp or course).
My suggestion is that you learn the entire business and be able to find and buy great deals in a variety of ways.
There is a very big difference between subject to and foreclosures: the amount of money that you, the investor, have to bring to the table.
With a foreclosure, the banks want all their cash immediately. So you either must have cash, or be able to borow the amount.
In a subject to deal, you need very little or even no cash.
Subject to is much higher risk, because the title to the property can be negatively affected by other people’s behavior. In a foreclosure, you own it and don’t have to deal with title issues or sellers who don’t hold up their end of the agreement.
From my perspective it seems the most important thing is to find a motivated seller (be it a bank or a homeowner). Once you find one you can structure a deal that will make sense for you and him. For example, you may want to buy the house outright - he may not like your first offer (the one you feel will give you the return you want for your investment). You can then work with the seller on structuring a deal that will work for him and you. Just my 2cents… Good luck!
PS: this is the approach I am using to start my business - find motivated sellers… I am a motivated buyer… :O)
Thanks for the replies.
I just wasnt sure if most investors were obtaining foreclosures because of what is happening.
So, just be more cautious and try and buy at a larger discount?