The collapsing real estate market is creating some exciting new opportunities in real estate for savvy investors not afraid to capitalize on a new opportunity. When real estate was hot and the market was rising, and interest rates were stable, millions of Americans opted to roll the dice on adjustable-rate mortgages. Now the market has tanked, and so many have lost their bet, rates are resetting and hundreds of thousands of mortgages are in jeopardy. A lot of these property owners have become subprime risks, and as a result are unable to refinance. Facing payments they can't make, some are simply walking away from their properties. This is bad for the homeowner, but for investors it's an once-in-a-lifetime opportunity.

When I mention the phrase "walking away from their property", I literally mean homeowners are abandoning their property. When abandoned property is mentioned, the mental image that comes to mind is typically a dump somewhere in the ghetto, with boarded up windows, and junk strewn about the yard. This is a classic example of an abandoned property, but it's also somewhat antiquated.

In 2007, an abandoned property can be a half million dollar home in a very good neighborhood. If the owners can't make payments, rather than face the indignity or the embarrassment of foreclosure, many of them pack their belongings into a U-Haul truck and drive away hoping to avoid the problem altogether. The home owner then mails the keys to the bank. Banks call this "Jingle Mail".

As a savvy real estate investor, you can cash in on this opportunity by locating a well-qualified abandoned property, tracking down the owner, and convincing them to sell to you.

It's not as difficult as it seems.

The best place to locate abandoned property that might fit your investment criteria is in middle or upper middle class neighborhoods. Good signs of abandonment are properties that are obviously vacant, as well as overgrown with weeds or covered with unshoveled snow. These properties may have newspapers piled up on the porch, and may be showing some signs of distress.

If you simply drive your target neighborhoods you'll locate possible abandoned properties. You won't know for sure it's been abandoned until you investigate the property a little more closely. A good place to start is with the next-door neighbor.

When you approach the neighbor, be certain to point out that you're a real estate investor and that you're possibly interested in purchasing the property. A little questioning at this point will tell you whether the property might be worth your time, as well as your effort, in tracking down the owner and trying to purchase it.

While there are a rising number of abandoned properties, it can sometimes be a bit of a challenge locating the owner. These properties lend themselves very well toward creative financing techniques because the owners are extremely distressed from a financial standpoint. In situations where the owner has simply walked away from the property, monthly mortgage payments are coming due like clockwork on the first of every month, and whether they're aware of it or not, the owner is still on the hook. In addition, property taxes and insurance premiums still have to be paid. Long story short, this property is a major headache for the owner.

If the owners aren't making their payments, eventually the bank is going to foreclose on the property, and take it back as an REO. If this happens, a major headache for the property owner becomes an Excedrin headache for the bank. Your greatest potential for large profits is before the bank forecloses, so you want to reach the owner before the bank does.

Next month in Part II, I'm going to explain to you how to go about locating the owners of these abandoned properties, so you can take advantage of this unprecedented opportunity to explode your net worth.

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