?The flat tax would be so simple, you could fill it out on a post card. A post card that would say, in effect, having a wonderful time; glad most of my money is here.?-Steve Forbes

Investors have a ton of choices in terms of what they want to invest in. One of these investment options is real estate foreclosures. Foreclosures occur when the home owner is unable to meet their monthly financial obligation to the lender and they default on the loan.

The lending company is forced to take back the property and try to make back some of the money they lost. Their goal is only to pay off the loan amount. While real estate foreclosure is a fairly lucrative market, there are risks associated with it just like any other investment.

Most investors pick up real estate at a pre-foreclosure sale. This type of sale occurs when the lender allows the home owner to sell the house by themselves in a effort to pay back the lending institution and then profit on what is left of the money from the sale. The lender agrees to this because it takes a great deal of time to sell a house and lender would like to be left out of the process.

It works well for the home owner because the house is not actually foreclosed on and therefore it does not go on their credit report. Which is all great for you, the investor, because these properties are already being sold at a reduced price and you can usually negotiate the price even lower. In addition, houses being sold at pre-foreclosure sales, have a quicker process, which means the investors get the property quicker.

Of course there are disadvantages. Often the home owners will stop cooperating which makes it difficult to close the deal. There is also competition between other investors looking to buy the same property.

Foreclosure houses can also be sold at auction for fairly reduced prices. Investors are able to bid on these properties. If the home was purchased at a reasonable amount, there is almost a guarantee that the investor will make a good profit when the house is resold. A disadvantage of buying a foreclosure home is that it can not be inspected before you buy it. Which means you could be buying into a disaster!

Also, if you buy a home at an auction the purchase price must be paid immediately. Often the price is too much money for the average investor to have on hand. Distressed housing is a great way to begin in real estate investment. For the most part it requires low investment funds, tit has low risk, and has the potential for great profits.

More info on your stop foreclosure information search:

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