Investment Strategy

Because investing isn't a positive issue in most cases, it's very like a game – you don’t grasp the result till the sport has been played and a winner has been declared. Anytime you play nearly any reasonably game, you have got a technique. Investing isn’t any completely different – you wish an investment strategy.



An investment strategy is largely a concept for investing your cash in numerous forms of investments that may assist you meet your monetary goals during a certain quantity of your time. every kind of investment contains individual investments that you simply should select from. A clothing store sells garments – however those garments accommodates shirts, pants, dresses, skirts, undergarments, etc. The stock market could be a kind of investment, but it contains differing kinds of stock,, that all contain completely different corporations that you simply will invest in.

If you haven’t done your analysis, it will quickly become terribly confusing – just because there are such a lot of differing types of investments and individual investments to decide on from. this is often where your strategy, combined along with your risk tolerance and investment vogue all return into play.

If you're new to investments, work closely with a monetary planner before creating any investments. they'll assist you develop an investment strategy that may not solely fall at intervals the bounds of your risk tolerance and your investment vogue, however will assist you achieve your monetary goals.

Never invest cash while not having a goal and a technique for reaching that goal! this is often essential. no one hands their cash over to anyone while not knowing what that money is being employed for and once they can get it back! If you don’t have a goal, a plan, or a technique, that's basically what you're doing! perpetually begin with a goal and a technique for reaching that goal!

What To Look For In Foreclosures

Foreclosure investing can be difficult if you are not sure what to look for in bank-owned homes. There are certain learned skills that come with consistent investment in foreclosures. Let’s take a glance at what a trained foreclosure investor’s eye looks for when seeking out the best home for his or her buck.

Location

Just like the price of homes sold normally, different locations offer different price ranges for foreclosed homes. Depending on the budget, foreclosure investors will decide which area they want to purchase in. Usually, the bigger the price tag of other homes in the area mean the investor will make more money off of the single sale of the house.



With smaller investment neighborhoods, the single sale may not be a high return, but there is usually a quicker turn around on the sale. Some investors only secure funds for short periods of time, which means the house needs to be flipped and sold quickly. This would call for a smaller investment neighborhood that will see more possible buyers in a short period of time.

Market Value

Foreclosure investors also look at the market values of the surrounding homes. These prices will determine the sale price of the invested house. Knowing the market value allows investors to be smart about which homes they decide to invest in. The value of the houses in the area could be the determining factor between buying a house in one neighborhood over another house in a neighborhood five blocks away.

Market value also helps the investor to know how much work to put into a house. There is only so much work that can be done to make a house profitable. After that, the investor is just throwing money in to make it look nice with no return on investment. Understanding the market value gives the investor the cap for maximum sale price in the neighborhood.

Work Needed

By knowing what the sale price will be capped at, foreclosure investors are able to determine if the work needed to fix up the house will be worth the investment. Well trained foreclosure investors know a general range of prices for what it would take to fix certain issues within a house. All of these fees needed to get the house ready for sale again get factored into the investment price.

Time also costs money. Understanding the amount of work needed let’s the investor know how long he or she will have to support the mortgage and bills for the house. If the work is a quick turnaround, there will be less money spent keeping the house up. If the work will take a long time to complete, the investor knows to plan for a bigger budget.

Understanding how to estimate time and work needed to fix a foreclosure comes with time, patience, and practice. Knowing what you should be looking for when deciding on a foreclosure is all about understanding location, market value, and what a good house should look like. Take your time when assessing a foreclosure and ask for advice from someone who has experience. Finding the right foreclosure to invest in will make all the difference in the success of your project.

Top 10 Foreclosure Cities

With the looming housing market, there are foreclosures popping up everywhere. Some markets have a wider range of foreclosed homes than others, but just about everywhere is feeling the blow. Let’s take a look at the top 10 cities for foreclosure investors based on the poll done by CNBC in 2010, listed in order by median price:

Pittsburgh, Pa.
Foreclosure discount 59%, Foreclosure as a % of resales 10%, Non-foreclosure median price $123,000, Foreclosure median price $35,000


Cincinnati, Ohio
Foreclosure discount 39%, Foreclosure as a % of resales 15%, Non-foreclosure median price $141,000, Foreclosure median price $65,000

Columbus, Ohio
Foreclosure discount 38%, Foreclosure as a % of resales 19%, Non-foreclosure median price $158,000, Foreclosure median price $71,000

Kansas City, Mo.
Foreclosure Discount 25%, Foreclosure as a % of resales 29%, Non-foreclosure Median Price $142,048, Foreclosure Median Price $97,152

Phoenix, Ariz.
Foreclosure discount 29%, Foreclosure as a % of resales 58%, Non-foreclosure median price $168,000, Foreclosure median price $100,000

Minneapolis-St Paul, Minn.
Foreclosure discount 34%, Foreclosure as a % of resales 26%, Non-foreclosure median price $210,000, Foreclosure median price $114,300

Denver, Colo.
Foreclosure discount 27%, Foreclosure as a % of resales 25%, Non-foreclosure median price $225,000, Foreclosure median price $135,000

Riverside, Calif.
Foreclosure discount 25%, Foreclosure as a % of resales 66%, Non-foreclosure median price $205,000, Foreclosure median price $140,000

San Francisco, Calif.
Foreclosure discount 24%, Foreclosure as a % of resales 39%, Non-foreclosure median price $530,000, Foreclosure median price $230,000

Los Angeles, Calif.
Foreclosure discount 27%, Foreclosure as a % of resales 39%, Non-foreclosure median price $435,000, Foreclosure median price $232,000

One of the interesting things about this list is the fact that California represents almost a third of the foreclosure market in the United States while Ohio takes a fifth of the market. Now, these results are based on the discount at the time of sale. It is also striking to note that of the top ten cities, the one with the biggest percentage of resale was not the city with the largest percent discount, but instead the markets which were usually known for their outrageous house prices.

In an investing strategy, this makes good sense, but it seems like a person who is buying for the long term, say five to ten years, will get much more out of the investment than a foreclosure investor who is just rehabbing the house in order to make a quick profit. With the lower discount percent, there is less room for play when it comes to upgrades and time on the market. On the flip side, with the bigger discount, there is more room to play around with possible upgrades.

Either way, many of the top metropolitan cities are on the list with areas like Miami, Atlanta and even Washington DC coming in under the top 25 cities hardest hit by the foreclosure wave. While this is difficult news for homeowners, foreclosure investors are taking full advantage of the prime buying time.

Investing Basics

What Are Your Investment Goals

When it involves investing, several initial time investors need to leap right in with each feet. sadly, only a few of these investors are successful. Investing in something needs a point of ability. it's necessary to recollect that few investments are a certain issue – there's the chance of losing your money!

 


Before you jump right in, it's higher to not solely verify additional regarding investing and the way it all works, however conjointly to see what your goals are. What does one hope to realize together with your investments? can you be funding a school education? shopping for a home? Retiring? Before you invest one penny, very deem what you hope to realize with that investment. Knowing what your goal is can assist you build smarter investment selections along the way!

Too often, folks invest cash with dreams of turning into wealthy overnight. this is often doable – however it's conjointly rare. it's typically a awfully dangerous plan to start out investing with hopes of turning into wealthy overnight. it's safer to speculate your cash in such the simplest way that it'll grow slowly over time, and be used for retirement or a child’s education. However, if your investment goal is to induce wealthy fast, you ought to learn the maximum amount regarding high-yield, short term investing as you probably will before you invest.

You should strongly contemplate talking to a money planner before creating any investments. Your money planner will assist you confirm what form of investing you need to do to succeed in the money goals that you simply have set. He or she will offer you realistic data on what reasonably returns you'll expect and the way long it'll take to succeed in your specific goals.

Again, keep in mind that investing needs over calling a broker and telling them that you simply need to shop for stocks or bonds. It takes a definite quantity of analysis and information regarding the market if you hope to speculate successfully.

Top 7 Foreclosure Investing Tips

Successful foreclosure investing is just like any other marketing strategies; the pros have learned how to navigate the system with ease. Strategies are developed and honed to a fine point. A skilled investor's mind weaves smoothly through all the red tape to make sure documentation is submitted on time and filled out correctly.


While many of these tips and techniques come with time in service, there are some top tips that can help everyone from the seasoned veteran to the wet-around-the-collar newbie foreclosure investor. Let’s take a look at some of the top foreclosure investing tips:


1.Market Research – Know your area. Knowing what other houses in the market go for is the first thing to do when looking at foreclosure investments. This will help you to know how much to bid at the auction, keeping in mind rehab costs, and how much you can sell the property for once it is fixed up. This will also help you estimate your profits and prepare for tax time.

2.Know the Law – Some communities have laws which mandate that a buyer must live in the house for six months to a year before selling. It is important to know if this is the case in the area where you are looking to invest because it will make a big difference in the time and money spent on a foreclosed home. Make sure you consult with a realtor or real estate attorney to verify the laws and rules where you are trying to invest.

3.Keep Your Eye Out – Always be on the lookout for foreclosure investment opportunities. They are popping up everywhere and it pays to drive around neighborhoods to see what types of tactics homeowners are trying out to get out of foreclosure. Also, banks post eviction notices before they ever post the sales in the paper, so get in touch with the person responsible for the property and get a jump on the rest of the game.

4.Line Up a Buyer – Since you will make more money if you do not have to buy and pay for the house yourself, try and line up a potential buyer before attempting to secure financing. This will help the time frame of the process and will usually keep the banks at bay when you are looking to secure a loan.

5.Plan Ahead – Keeping a step or three ahead of the game is quite difficult to do, considering how the time frame may vary when dealing with bank-owned homes. While it is difficult, having a plan in place every step of the way will help you keep it all together and know exactly what is supposed to happen, and when. This will also let the banks know that you are serious, just like a business plan for a new venture.

6.Decide on the Use – Determine whether the property you are looking at will be remodeled and sold or kept as an investment property to rent out in the future. This is an important part of foreclosure investing. The differences in how to get funding for those two scenarios are like night and day. For the sale, you can have a buyer already lined up, but for the rent situation, you will have to secure all of your own funding up front.

7.Find Motivated Sellers – Since foreclosures are bank-owned, it is important to understand how they work and how much it hurts them to have foreclosures on their books. Finding a home that has been foreclosed for a long period of time is a good indication that the banks are almost willing to do anything to get that property off their books. This will give you the most bang for your investment buck, but remember to take into account the rehab costs of the house that has been sitting vacant for a while.


Foreclosure investing can be extremely lucrative. The biggest thing to remember is to do your research. Once you have researched, develop a game plan and stick to that plan the best you can. The ease of the process will come with time; you just need to find your own pace, your own “groove,” and you'll be off and running before you know it.

Protecting Your Foreclosure Rights

While people who are being foreclosed on have rights, you as an investor must be conscientious of those rights while still knowing when it is time to stand up for your own rights. Yes, believe it or not, foreclosure investors have rights, too. Let’s take a look at one of these laws that is meant to protect the individual losing the home and how you can use the same law to help protect yourself.


Right of Redemption

The Right of Redemption law gives the previous homeowner, the one whose house was just foreclosed on, a certain amount of time after the sale of the foreclosure to “redeem” their property. This can be a big pain for foreclosure investors who are on a strict time crunch to get the house remodeled and back on the market for a profit.

While the homeowner should have a chance, this can wreak havoc on the nerves of a foreclosure investor. It is important to be extremely careful because your profitable investment could wind back up in the hands of the default borrower again and you could be out a lot of money. Be sure to work this redemption time into your overall plan.

Know the Period of Redemption

It is important to know the Right of Redemption period of the jurisdiction for the property you are trying to purchase. Each state varies and different counties or parishes within those states could have their own laws. Some periods can last up to a full year, giving the previous homeowner plenty of time to work their way out of their foreclosure issue. Some areas in Florida, on the other hand have time frames as little as one day.

Until the period of redemption is up, you should really hold off on doing any repairs. The last thing you want is to have a fully remodeled home when the homeowner decides to reclaim their property. If this happens, seek legal advice because the owner, technically, does not have to pay you anything for your work. The only thing they are responsible for is back taxes and any other mortgage and insurance fees associated with repossessing their house. The best way to avoid this is know the law and be willing to wait to take possession and to do any remodeling.

Buy Your Rights

You do have the option to purchase Redemption Rights from the owner at the time of sale. Many times buying these rights will put you out another couple thousand dollars, but you will be able to proceed with your plan. Many owners, if they are being foreclosed on, are in no position to exercise their redemption rights to begin with, but the last thing you want is the off chance that it happens.

You can also try to buy the rights from an owner and then “reclaim” the house after it is sold for a fraction of the price at auction. This is a risky move and it helps to have a realtor and a real estate lawyer on your side.

You do have rights as a foreclosure investor. While those rights must come second to the rights of the previous homeowner, they are rights nonetheless. If you have any questions about all of your rights as an investor, be sure to seek legal counsel with a foreclosure attorney.

How To Invest In Foreclosures

Foreclosure investing is extremely different than what most people envision it to be. The easy lifestyle proposed in TV infomercials or magazine ads is, for many, just a dream. These get-rich-quick commercial spots sell better than the truth; hard work and a lot of time and money invested. Let’s take a brief look at how to invest in foreclosures.

Work

People who are big into foreclosure investing usually put a good deal of time into their research and preparation for buying a foreclosed house. Once the buying process is complete, it is time to put more work in fixing up the property and working with a realtor to get the house back on the market for sale.

Foreclosure investing is no walk in the park, but it can be extremely profitable if done correctly. The first thing to do when investing in foreclosures is to have a good estimate of time and work needed to complete the process because if you only plan to have everything tied up for one month and it ends up taking six, you have just cut your profit deep.

Money

The next issue to deal with is money. People who have been in the foreclosure investment business for a while do have their own set of funds saved to back up their purchases if needed. It is always good to have more than you think you need in case some of the renovations go over your budget.

While you don’t have to have all of the money yourself at the time of purchase, you should not let that stop you from searching out properties. If you can’t afford the purchase on your own dime, there are certainly ways to find investors to back you up. The only thing to keep in mind with investors is that if you have a good deal, it should be fairly easy to find investors, but if no one wants to invest, chances are it is not a good deal.

Knowledge

Without the proper knowledge of market values, you cannot do anything with a property. If you are not sure what a house should sell for, you cannot gauge if the asking price would be worth it, or if you will be able to make enough money on the sale of the house. Without the knowledge, you also do not know how much work you should put in to make it worthwhile.

It is also important to be aware of any foreclosure laws for your state, including what states are allowed to do with people who are defaulting on their loans. It is also important to understand the federal tax liens, how to find out if property information and descriptions are correct, what to do with unpaid property taxes, and even partial interest payments.

Basically, the key is to know what you know and understand where your strengths and weaknesses are. The following is a short list of the basic ingredients you'll need before you attempt a foreclosure investing project:
understand the market
have the money to invest
have investors
know the laws for your state

Foreclosure investing can be extremely difficult, if not impossible, if you don't have those four items under your belt. If you have a good understanding of at least two of the three, you can spend a little time researching the others and learn as you go.

It is also good to network with other investors in your area and learn from them. Not everyone is looking to purchase the same things, so it is okay to mingle and learn from each other. Most investors like to share their stories so you can learn from their successes, as well as their mistakes.

How To Flip A Foreclosure

You have just finished buying your foreclosure; now it is time to get it ready to sell as quickly as possible. Before you can sell your investment, you have to know what needs to be done, and you need a plan. Let’s take a look at some of the things you need to consider when thinking about how to flip a foreclosure.


Market Value

With all types of foreclosure investing, it is imperative that you know and understand market value in the area you are investing time and money. Without knowing market value, you may end up out-flipping your investment. Basically, you end up putting too much money into your improvements and the market will not allow for a return on investment when you put the house up for sale.

Market value also helps you keep in mind your budget. If you have an idea about how much you will make on the house, you will be better able to estimate the longest time you can spend holding on to the house before you begin to lose money. Knowing this gives you a time frame for how long you can spend making modifications and get it on the market and sold.

Make Decisions

Now that you know your market value and how long you have to finish your improvements, it's time to make decisions. Which improvements can you make to get the most money back in the shortest amount of time? There is a fine balancing act between what you want to do and what you are able to do with your time and money.

Making decisions before you begin the work will save you time and money. The difficult part comes when you begin to make the changes and something unexpected happens. For instance, you try to upgrade the kitchen and find out the sink has been leaking into the crawl space below for the last two months. At this point, it is important to make quick decisions and speak with a certified contractor or inspector to see which way is best to handle the situation.

Take Charge

Finally, in keeping with the time and money standard, stay on top of your construction crews. Making sure that things are done on time and crews do not give you the run-around is important to flipping your foreclosure. Giving the contractor the ability and space to do what they need is important so you do not crowd them, but you should visit the site often to check on the progress of work.

If the remodeling job is not going how you like, don’t be afraid to speak up and say something. After all, the finished product is your obligation. Until you sell the house, your thoughts and concerns are still top priority. If you are getting pushed around or your plans are being ignored, it is okay to terminate your agreement with the contractor. Of course you should pay him for what he has done so far, but it is your right to hire someone else.

By knowing your market value, making decisions that will not price you out of your upgrades, and taking charge in the remodeling process, you will have a much easier time flipping your foreclosure. The more foreclosures you invest in and remodel, the easier and more comfortable these tasks will become. The flow will also be more natural and your instincts will improve over time.

Foreclosure Bidding Strategies

There is a large difference in investing in a pre-foreclosure home and a foreclosed home. Once the banks have purchased the home back, and are setting up the bidding wars, there are certain things you must keep in mind in order to increase your chances of winning the housing bid. Let’s take a look at some of the things to keep in mind before you push your paddle to the sky.


Know Market Value

It is important to understand the market value of the area around the house. While a bank would love to sell a foreclosed home, they are not going to be sloppy with their money. Banks have real tors also and understand what a house should sell for. Banks also understand that foreclosed homes are not going to sell for exactly market value, so knowing what the value is, will help you to price your bidding strategy.

Keeping the market value in mind will also help when it comes to setting up your maximum bids. When you know what the house will sell for once it is fixed up, you have a gauge on how much you will make. Of course, even if you did have an idea about market value, you couldn’t determine your expected profit until you analyzed the current value of the house.

Analyze the Value

Buying a foreclosed home is different then standing on the courthouse steps and purchasing a pre-foreclosed home through a bidding war. With the courthouse situation, you do not get to look at the house before you bid on it, as-is style. With foreclosed bidding today you get a chance to walk around inside of the house and figure out if you would like to bid on it.

Once you analyze the value, you have a little more wiggle room with the banks. The banks know they will not get full market value for the house. They understand that the sale price on the foreclosed home will be dependent, somewhat, on how much renovating will need to be done. Therefore, the bank is willing to let the price slip “south” a bit.

Know Your Limit

With knowing the market value and estimating the current value of the house, or the cost to fix the house, it is also important to know what your maximum limit is. When bidding on a foreclosure, you must keep in mind not only the fact that you are buying a house, but you must also have a budget to fix it up where needed. Knowing your limit will help you decide what the highest bid you can place will be.

Put Cash Down

If you are using a credit purchasing system, which most people do today, make sure you have cash to put down on the house. This will help your chances of winning the bidding competition because the bank will get part of their money back immediately. To the banks, cash is like waving a top-secret clearance badge on a military base. It is almost a free pass to their hearts. Even if you plan on flipping the house, having a bit of money to put down will almost always ensure that you win the bidding war.

Foreclosure bidding strategies are pretty straightforward. Know the market value, understand what it will cost to repair the house in the current condition, know your limit in respect to the repairs that need to be made, and bring cash with you to flash around and show you are serious. Now get out there and win those bids.

Finding The Right Bank

In the foreclosure-investing world, it is important to have the right bank backing up your decisions. You want a bank who will work with you as quickly as possible in order to seal the deal and win the bid on that prime foreclosure. Having a bank that does not work well with you and your timetables, even if they have great percentage rates, can hurt your business because you may end up losing those great foreclosure bids. There are four simple things to look for when determining if a bank is right for you and your foreclosure investment business.



People

You have heard it before about a restaurant, “the servers make all the difference in the world.” The same is actually true about finding a good bank. Having the right people who can get on board with your vision and understand what you need in a bank is almost more important than the house you are bidding on.


When people can relate to you and make your banking time enjoyable, it says a lot for how well you will do in the foreclosure investing world. Even if a bank's interest rates are a quarter of a percent higher than the crummy bank down the road, it may be worth it because your attitude and confidence when bidding will be much better with a bank you can trust as opposed to a bank in which the people just gave you the run around.

Hours

A bankers lax hours may be a source for jokes, but it's not funny when you're trying to run an investment business. Pick a bank and banker who is there when you need them to be. Many banks are now open later, but make sure you pick one with online banking and a 24-hour customer service line. Again, the online agents must be good people, too, who are willing and able to help you get answers whether it is midnight or midday.

Location

Picking a bank with many locations is always a good idea. When getting ready to go to war on foreclosure biddings, the last thing you want to do is drive an hour across town to visit your bank. Your bank should have a location that is convenient to wherever you are.

Keeping the locations close allows you to swing by, pick up a check and get back before anyone realizes you were away. It is also helpful to have a bank close to the auction just in case you need to make any last minute changes to your account or request more money.

Speed

Having a friendly, knowledgeable, and convenient bank is great, unless it takes a minimum of two weeks in order to get a response to a request. The bank you choose must be quick with their responses. If you can't get a fast answer to a question, get another bank.

It is important to balance that speed with being efficient, but a bank that is top in both categories is one that you want to hang onto. If there is a problem with another investors’ funding at an auction and your bank can turn around a counter offer quickly, you might have a shot at scoring that foreclosure after all.

Picking the right bank is important if you plan on investing in foreclosures. Make sure you look for the quality of people, the hours of operation, the locations of branches, and the speed at which everyone operates. Most importantly, find a bank that fits your needs and works the way you like best.

Finding Funds For Foreclosures

There are many different ways to secure funds for foreclosure investing. Many of the top investors have their own money allotments for foreclosures, or a tight relationship with a bank who views them as a small business. While this is great for the seasoned investors, where does that leave the new investors in the market? Let’s take a look at some popular funding options for buying foreclosed homes.


Buyer

Many times, when investing in foreclosures, you do not even need to have a bank loan, you just need to be able to identify a suitable buyer for the property that is willing to pay the right price. This makes it easy to find and buy foreclosure investment properties if you can find a buyer beforehand. Remember to have a contract and pre-approval for the buyer’s bank loan so, if they change their mind after the bid has ended, the full amount of the property does not come back to rest on your shoulders.


Having a buyer lined up will take a lot of stress off of you and will make the process run a little smoother than normal. Banks will not look for as much information from you in order to get funding approved and the banks will see another full-time buyer, which puts them at ease.

Banks

If you don’t have a buyer lined up, or you plan on buying the foreclosure for your own benefit, possibly for a rental property, then you will need to secure funding yourself from a bank if necessary. It is important to find the right bank and is usually a good idea to work with a foreclosure realtor for the first time or two in order to feel your way through the banking market.

Once you have flipped a few foreclosures or are actively paying on one rental property when you decide to purchase another, it will be a good idea to know a few people on the inside of the foreclosure financing department at the bank. It is also a good idea to buy down as much of the interest rate as possible or start out by choosing a bank with an extremely low interest rate to begin with. Having the low rate will help your payments and keep you in check with your budget.

Grants

Believe it or not, there are government grants out there that help investors buy foreclosed homes. The reason these grants are out there is because the government feels that a foreclosed home that has been flipped often provides affordable, quality rental housing for low-income families.

There is a specific program called the Rental Rehab program which is a forgiveness loan, which means the program finances up to 50% of the total foreclosure rehab costs. While this does not secure the full amount for the foreclosure, it is just another way to keep your budget in check when looking for available financing.

There are plenty of ways to secure funding for foreclosed homes. The key is being diligent in your search and seeking out the best deal. While having a buyer pre-approved is a great thing, it also helps to have a banking mortgage finance guru on your side as well. If all else fails, government grants are a great way to keep investing if you don’t mind the paperwork on the front end.