Why Investors Love Foreclosures
Savvy investors love investing in foreclosures because investing in this way means enjoying instant equity. If an investor buys a foreclosure priced at 20% below market value, for example, that 20% is instantly available as equity that can be used as collateral. The investor can even flip the property instantly, marking up the price less than 20% for instant profits. Some of the best-known real estate investors in this country have built their empires with foreclosures.
Foreclosures are an amazing opportunity because they are repossessed real estate. The previous owner of a foreclosure defaulted on their mortgage and this allows the lender to repossess the property in order to try to recoup the money lost on the loan. The property will be put up for sale at a foreclosure auction that is open to the public. If the property is not sold through an auction, the lender will try to sell the property at a discount themselves. In the event that the defaulted loan was insured by a government entity, a government agency will try to sell the property through an approved real estate agent. At each stage of the process, it is possible to buy the property at a deep discount.