The number of real estate foreclosures rose dramatically in 2006, and all indications are that in 2007, that number will continue to rise. This presents some great opportunities for people interested in foreclosure investing. While late-night infomercials and real estate gurus might try to convince you that through foreclosure investing, you can buy properties for pennies on the dollar, the truth is that usually, you will be only get a slight discount, if any. The reason for this is that often, many people, including real estate agents, have access to lists with foreclosed properties.

That said, savvy investors can still make good money with foreclosure investing. Here are some tactics that are commonly used.

1. Approaching sellers before the actual foreclosure

This can require some work, but is probably the most lucrative way to profit from foreclosure investing. By going to the local courthouse, you can learn who has defaulted on their loans. Then, you can approach people who are about to be foreclosed, and try working out a deal where you bail them out by buying their property at a discount and paying off their loans. Why would they sell you their homes at a huge discount? Because if they don't, they face foreclosure and stand to lose a lot more. You will need some patience to work at this stage since you will be dealing with financially desperate people.

2. Buy run-down foreclosed properties at big discounts, fix, and sell.

By signing up with the appropriate foreclosure sites and having the right contacts, you can get lists of foreclosed properties, then hunt for potential moneymakers. With this type of foreclosure investing, people often look for run-down homes that are discounted way beyond what they should be. An experienced investor will know what to look for, then buy these homes, fix them up cosmetically, and sell them for a huge profit.

While there are other ways to profit from foreclosure investing, such as purchasing non-performing mortgage notes and then foreclosing on the property, the two methods above are some of the most common and popular ways that people take advantage of foreclosure investing opportunities. Foreclosure investing is not rocket science, but you will need to know what you are doing in order to avoid problems. One trap that beginners in foreclosure investing often fall into is ending up with a property that has huge problems that are not known at the time of purchase. This happens because many foreclosed properties are sold 'as is' at auctions where you do not have the luxury of having an inspection done.

The best way to avoid potential problems with foreclosure investing is to put some time and money into a foreclosure investing program or course, read many books, and join foreclosure websites that list foreclosed properties and provide useful information on each one.

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