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Buying Foreclosures: Financing

By: Chris Thomas

At first, it may seem like real estate investing is reserved for the well off or at least the financially comfortable family. If you are of low to moderate means, you may dream of investing in real estate but feel that it is an impossible dream because you cannot afford to get started. You know that once you get that first break, you could make a lot of money. You’re smart; you’re savvy, but you need a little help taking that first step.

You might have already figured out that buying foreclosures could be the perfect opportunity to buy property inexpensively, but still, how can you raise the money to make your first purchase?

One way that you can finance your dream of buying foreclosures is by taking out a conventional home loan and paying it off before the first loan payment becomes due. This can be a tough squeeze, but investors have been successfully buying foreclosures, flipping them, and reselling them for profit in many housing markets within a few weeks. While it can be done, you still need to be sure that you can swing the loan payment if the house doesn’t sell right away. And if you are strapped financially already, you may have a hard time getting the loan in the first place.

Another financing option for buying foreclosures involves the equity in your home, if you own one. By refinancing your house, you may be able to get enough money to purchase a low-end foreclosure. Once your investment sells, put the money that you borrowed back into your home and use the profit earned to finance your next project.

If you don’t own your home, you are in a great position to begin buying foreclosures. As a first-time homebuyer, you will be eligible for many unique financing options that can save you a bundle of money. Plus, you can earn tax breaks if you live in the home while you’re fixing it up for resale. Here’s how it works: You buy an inexpensive foreclosed home, live in it for two years while you fix it up all the while paying the bank note down, sell the house for profit after two years, and walk away without paying any taxes on your earnings. Now you can use this money for buying even more foreclosures.

Those options only start to cover some traditional financing, and don’t take into account any type of creative financing. When you throw hard money loans, seller-carry mortgages and lease options into the mix, your options, whether you have cash, credit or neither, really take off.

See, there is a way for everyone to become a real estate investor no matter how small their means.

About the Author: Chris Thomas is a real estate investor and author of the best selling ebook "Dominate Preforeclosures," which teaches you how to acquire property in pre-foreclosure with a successful, proven way to approach homeowners and get the deal. Learn the strategies that the top investors use daily, but refuse to share by visiting Buying Foreclosures: Financing

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