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.

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