The trick to investing in pre-foreclosures is having a systematic process for finding them. I read an article this morning about investing in pre-foreclosures and the authors definition of pre-foreclosure is different than mine. My definition is that a preforeclosure property is in the first of four possible stages, or the period before a notice of default has been filed. The other three stages being the period after the notice of default is filed, the auction and new ownership being the last - which could include the bank. Some might argue that preforeclosure is the period between the time that notice of default is filed and the auction date. Just know that I'm talking about the period before the notice of default and let's leave it at that.

Just by the nature of the stage of preforeclosure they are more difficult to find - the public doesn't know yet because a notice of default has not been filed. The first thing to do is look at the real estate classifieds and realtor advertising for subtle clues. Phrases such as must sell, under market, under appraisal, rent to own, lease option, take over payments, divorce, illness, death, owner carry, motivated seller and nothing down indicate a motivated seller. When you find something interesting then make the contact.

You can actually run an advertisement that targets distressed property owners. Figure out what the hot buttons are and create a small ad to run in the newspapers and even Craigs List.

Start to get the word out about what you are looking for to friends, family, business contacts - network with everyone you know or come into contact with. Have some business cards made up to hand out. I guarantee that someone you know, knows someone that is in distress and needs help.

Drive around neighborhoods and look for homes that appear to be neglected. The first thing to go when a home owner is in distress is the routine maintenance. Jot down addresses and send letters. Or go knock on the door and introduce yourself as someone who is looking to purchase a home in the area and you were wondering if they know of any for sale that may not be on the market.

Use your imagination to dig up the nuggets. It won't be easy but there will be a lot less competition.

More info on your stop foreclosure information search:

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