Banks don't want to have foreclosure property on their hands. What this can mean for you is a huge real estate investing opportunity: buying properties that are in preforeclosure.
A preforeclosure is a property on which the bank has begun foreclosure because the owner has missed several mortgage payments. When the bank initiates foreclosure on a property, you can buy it up to the day of the foreclosure auction. Done correctly, buying preforeclosures can be a profitable real estate investing venture.
Buying a preforeclosure has many benefits:

• A low cash down payment on a preforeclosure is possible if structured properly.
• You have ample time to research preforeclosure properties ? you can buy a preforeclosure property up until the day of the foreclosure auction.
• Unique and flexible sales agreements are possible.
• Acquiring a preforeclosure property affords you a real estate investment at a discount averaging from 20% to 35% off market value.
• When you buy a preforeclosure, you help save the homeowner's credit by avoiding a foreclosure auction.

As with all real estate investing, preforeclosure investing has some cons as well as pros. Though buying preforeclosure property can be highly profitable, you should consider these points:

• It is sometimes difficult to contact the owner of the preforeclosure property.
• You will usually have a lot of competition ? it's no secret that preforeclosure investing can be lucrative.
• The courthouse research to find preforeclosure property can be time-consuming.
• You may need to negotiate with any holders of liens on the preforeclosure property.

Weighing the pros and cons, if you decide preforeclosure investing is for you, follow these basic steps for success:

• Locate loans in preforeclosure.
• Contact your county court.
• Search for County Recorder preforeclosure data online. A free resource to use is www.netronline.com.
• Lo ok in the "Legal Notice" section of the newspaper for foreclosures and upcoming foreclosure auctions.
• Evaluate and narrow selections to pursue
• Inspect the preforeclosure property
• Evaluate the property owner's needs
• Determine the market value of the preforeclosure property, fix-up costs, potential sales price and profits
• Arrange default work out by negotiating with the owner and the lender
• Close on the property, repair and resell it quickly.

Despite a little necessary time and effort, investing in preforeclosure properties can be well worth it.

Ada Smith is a real estate investor who has applies the principles described in several pre-foreclosure investment courses

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