What To Know Before You Invest In Foreclosures
It sounds great!!! Get a home for less than the market price, and flip it. There are some things you need to know before you do.
REAL ESTATE INVESTINGNEED TO KNOW BEFORE...
Mike A. Fagundes
6/24/202311 min read
What to Know Before You Invest In Foreclosures?
The most common way to start investing in foreclosures is to study real estate and ways to buy real estate from someone who knows. Foreclosures are not easy to find and negotiate. If you don't have the knowledge and the experience you can be eaten alive by other investors, become discouraged, quit, or let F.E.A.R. get the best of you and never even do anything.
This is the reason for this post. So that you can better prepare yourself for what you will face when you go out to buy your first foreclosure property, no-money-down deal, lease-to-own,
Table of Contents
These HERO Movies Have Inspired The Names of Our H.E.R.O. Program
Get Educated!
Find Foreclosures
Where Do I Get the Money to Invest In Foreclosures?
Kill The F.E.A.R.
Conclusion
I Don't Know Where to Start?
This is where we as mentors at the P2G Foundation seek to help those who want to get out of what Robert Kiyosaki calls "The Rat Race". The day-to-day struggle of getting out from under your debts, and bills, and from living paycheck to paycheck. We seek to help get people out of the fear of losing everything because a family member gets sick, and the medical bills destroy your savings (if you even were able to save anything), or destroy your credit history, and force you into filing for bankruptcy.
This why P2G Found is here to help "Educate the Youth (and their families) of Today to Become Leaders of Tomorrow." Through our H.E.R.O. Program. Now that you know a little about why I am here, Let's get back to the reason why you are here.
First things first you need to start with:
Seek a Mentor
The Fastest way to learn anything is to learn from someone who has done it before you. Ways to find a mentor are:
Go to a Real Estate Investing Seminar (Price $997 -$100,000+)
Be Careful Where You Go and Who You Pay to Learn From. Most out there are scammy or just promise to give you all the support you need, but then are gone and never to be heard from again with your life savings after a couple of years.
The People on TV that have their images used by the professional sales company that hires investors to come and do the training are not actually the ones who do or come up with the course materials. They just license their images for a royalty fee and make an appearance if you buy the big $100,000+ package for the resort location you may be lucky enough to get a photo taken of you and the TV personality.
Still, the $100,00+ package does not guarantee you. will succeed, and they attempt to still sell you more packages from Affiliates that pay to have a captive audience that has money to spend.
I have found that the people who have invested their capital into these seminars then are left with no capital to invest in their own deals and are just get left behind.
Get a Real Estate License and Join a Brokerage That Specializes in Investing and Managing Properties.
Some Real Estate Brokers are just glorified salespeople and don't invest in properties other than buying their first home or a couple of rentals and don't manage it themselves
Get A High SCORE.org!
SCORE.org is a nonprofit organization of retired business professionals that volunteer their time to help new business owners on how to start, run, and manage their businesses.
SCORE.org doesn't specialize in Real estate Investing, but you can find, bankers, realtors, lawyers, and contractors who may know or have worked with real estate investors and can introduce you to them.
SCORE.org can help you learn about how to protect yourself and your investment partners from lawsuits and keep your nose clean when dealing with Taxes and the IRS.
bookkeeping
accounting
getting incorporated, C / S Corp, Single or Multimember_LLC, LLP, Non-Profit (like I did), etc.
payroll
setting up management/leadership
contracts
negotiations etc.
SCORE.org is a great resource for you to cut your teeth on how to structure your investment business to keep you and your partners as safe as possible.
P2G Found (Shameless Plug)
Yes, we at the Poor 2 Glee Foundation (P2G Found) have an Education/Coaching Program for youth and Low-Income Families.
P2G Found's H.E.R.O. Program is our Earn as You Learn Program.
We train you on within the H.E.R.O. Program
Preregister For The H.E.R.O. Program Below!
What if I Don't Know Anything About Foreclosure Investing?
The simple answer is that you need to educate yourself about the risks and how to speak with other investors, Real Estate Agents/Realtors, and banks/lenders. If you come out hot and know nothing about the language of Real Estate Investing or investing in Foreclosures. You will not be taken seriously and no one will take or return your calls about a hot deal that you are after.
Get Educated
Yes, it's similar to Seeking a Mentor, But... if you want to earn some respect from a mentor, or anyone else you want to work with, you should prove to them that you are willing to learn and put in the work to prove that you are not a waste of their precious time.
Go to a Real Estate Investing Seminar (Price $997 -$100,000+)
You can meet up with other like-minded people and start an investment group to raise funds and partnerships.
Still, you should be Careful Where You Go and Who You Pay to Learn From. Most out there are scammy or just promise to give you all the support you need, but then are gone and never to be heard from again with your life savings after a couple of years.
Get a Real Estate License (Price between $500-$1,500)
With this small investment of time and funds, you can get access to the MLS and get paid a commission to buy your first and every foreclosure you buy.
If you take the lending side of the license. You can find the best rates for your investment property and even structure the deals in some cases to include the closing costs in the loan and not have to pay anything out of pocket. ( a trick I learned from a lender friend of mine)
Read Books and Articles (Avg. Price $
There are many great books and articles available that can teach you the basics of real estate investing.
Some of my favorites include:
The Intelligent Investor by Benjamin Graham
The mentor of the greatest investor of all time, Warren "The Oracle of Omaha" Buffet this book is just as relevant today as it has been from the first day it was printed.
though not a real estate investment book it is a great book about how to invest. The mindset of an investor and how to find a great deal. eg. stocks, businesses, or even real estate.
Rich Dad Poor Dad by Robert Kiyosaki
You need to learn how to change your mind about business and investing. Two of the many takeaways I got from this book were how to simplify Business Accounting into one basic understanding. Even if your accountant disagrees with you, this mindset will help you to think about... How can I profit from this?
"Anything that puts money into your pocket is an Asset, anything that takes money out of your pocket is a liability". - Robert Kiyosaki
"Your house is not an Asset, but a Liability." - Robert Kiyosaki
The Book on Rental Property Investing by Brandon Turner
Brandon Turner is a contributor to the Bigger Pockets Podcast and an average Joe like you and I who has been investing in real estate with the B.R.R.R.R. method and has provided for himself and his family for generations to come.
The Millionaire Real Estate Investor by Gary Keller
As I mentioned earlier about getting a mentor, you can either pay thousands of dollars to hopefully meet and spend a day with one, or you can invest $21 dollars and have all of their experience delivered to your door.
Gary Keller is not only a Realtor listing Agent, but also an Investor and he shares his best tips and strategies in this and his other books. Click the book Amazon link and get it for yourself.
The Automatic Millionaire by David Bach
I speak a lot about automating your Mortgage payments in my other blog posts. But I not only automate my housing expenses, but my car payments, my investments, and my savings all because of this book by David Bach.
Take Online Courses
There are many online courses available that can teach you about real estate investing. Some of my favorites include:
The Real Estate Investing Masterclass by BiggerPockets
The REI University by Brandon Turner
P2G Found H.E.R.O. Program
Educating yourself from books, mentorship, or seminars can and are some of the best ways to learn from others' years of wisdom and experience being condensed into a short read or course for you to speed up your learning curve.
Where Do I Find Foreclosures?
Finding Foreclosures
Foreclosure.com
Here's another shameless plug, but I have so much great praise for this company and they also were the first to permit us to become an affiliate for them even when I didn't have any views and only one post on the blog. For a company as big as Foreclosure.com to take notice of us and our mission with this site and P2G Foundation.org. It says a lot about this company and how much they care about people.
Try Them Our For Free For 7 Days
They offer a free 7-day trial of their software, then it's less than a dollar a day to search and get all the listing information you want.
They Have a Free Newsletter That Sends out Free Daily Posts of Any Areas That You Are Interested In.
If you aren't ready yet to start they also offer an up-to-date daily foreclosure list of posts that dropped that day for any location in the United States that you are interested in. The best part is that they don't spam you with other offers. You only get the listings and the same Affiliate partner sites that you can check out at the bottom of every email.
You can even check out their software here. Just put the zip code or city and state that you would like to see and watch how many foreclosures are in your city today.
Yes, I am an Affiliate for them, and if you choose to use them, You would greatly help out our Mission here, To Educate people to pay off their mortgage sooner to improve their goals to get out of debt or from below the poverty line. But also how you and they can educate themselves on how to buy real estate as investments, eg. foreclosures to leave a legacy for their families of wealth not poverty.
Read About This Very Subject on This Post Here:
How to Buy a Home In Foreclosure!
and this link will take you to the exact location about where to Find Foreclosures in more detail.
What if I'm Too Afraid to Start?
Kill The Fear
Acknowledge Your Fear
The only way to overcome a fear is to acknowledge that you have it. Bring yourself as close to the thing that triggers the fear, but still feel safe. Then, take a step closer to it and wait. Feel the fear, recognize it there, and take deep slow breaths until you calm down. Don't try to pretend that you're not afraid, because that will only make the fear worse.
I myself hate heights. From reality or in a video game or movie. If the person or video game character falls off a cliff into an endless abyss, every muscle in my body tightens up. Yet, I have not let that fear stand between me and, bungee jumping, taking a photograph next to the edge of the Grand Canyon, and even doing indoor rock climbing up a 30-foot wall (I was trembling every time I looked down.) Yet, I did those things and will do more.
Understand the Source of Your Fear
Once you've acknowledged your fear, take some time to understand where it's coming from. What are you afraid of? Is it the unknown? Is it a failure? Once you understand the source of your fear, you can start to address it.
Educate Yourself
It may sound like I'm beating a dead horse over here, but it is the most fundamental thing to succeed in life. The more you know about real estate investing, the less afraid you'll be. Learn about the different types of investments:
Foreclosures, Pre/Auction/REO click this link to read up more about that on....
Rent-To-Own?
Short-Term-Sublease (aka AIR B&B strategy)?
Fix & Flip?
B.R.R.R.R?
etc.
Learn about the risks involved and the potential rewards. The more you know, the more confident you'll feel. The more you do and learn, the more your confidence will grow and your fear lessens.
Take Action
The best way to overcome fear is to take action. Start with making a phone call after you read a few books or take a few courses. Call a Realtor about how you want to invest in properties and you have friends who are looking to join you to get a few deals. Then, make another phone call, and then another, and another, etc, etc. Once you've taken those first steps, your fear will start to become less and less. It's good for you to remember that when you start small and take things one step at a time you have come a lot further than standing at the same spot having done nothing.
Start Small
If you're feeling overwhelmed? Then, start small! Don't try to buy a 10-unit apartment building right off the bat. Start with a single-family home or a condo. This will help you get your feet wet and build your confidence. From taking it Step-by-Step and from Deal-to-Deal. You will get better and more confident the more you do.
This is where P2G Found is here to help you do, just that.
Get Help From Others
There are many people who can help you overcome your fear of real estate investing. Talk to other investors, join a real estate investment club, or hire/Partner with a mentor. These people can offer you support, advice, and guidance.
These of course are just the start of the journey to getting started with Real Estate Investing in Foreclosures. There is so much more to still do and learn.
What's your FEAR story and How You Over Came it or, at least working to Overcome it?
I'd love to hear it.
Email it here... admin@payextraonmortgage.com
and
Put In The Subject Line
"MY FEAR STORY".
Where Do I Get The Money to Invest in Foreclosures?
How to Raise Funds
raisin funds for your first or next foreclosure investment can be difficult if you have no idea where to start. Here are a couple of quick points to get you focused on where to start.
Use Your Own Money
This is the best way to finance your foreclosure investing if you have the cash available. You won't have to pay any interest or fees, and you'll have more control over the deal.
Get Prequalified for a Loan From a Bank or Credit Union
This is another option, but you'll likely need to have good credit and a strong down payment, usually about 20% or more. But if you are looking to live in the property and qualify for a first-time home buyer program. Then, you may only have to put as little as 3% down.
Work with a Private Lender
Private lenders are individuals or companies that provide loans to real estate investors. They may be more flexible than banks or credit unions but charge higher interest rates. After completing the T. Odinson Level of the P2G Found H.E.R.O. Program, we will connect you with one of our private lender Affiliates to help you buy an approved good deal.
Get a Hard Money Loan
A hard money loan can be a short-term loan solution that is typically used to finance a fix-and-flip project. They have high-interest rates and fees and only lend between 55% - 75% of the LTV (Loan To Value) of the property.
Use a Line of Credit or H.E.L.O.C.
A line of credit is a revolving loan that you can use as needed. This can be a good option if you're not sure how much money you'll need to finance your foreclosure investing.
Partner with (an) Investor(s)
This is a good way to pool your resources and get a larger deal or to just get your first. You'll need to find someone who has similar investment goals and experience. This is where a Mentor is a great person to know and have on your investment team.
Conclusion:
Getting Started In Real Estate Foreclosures Is Not Easy.
This is why we suggest that you find a mentor, get educated, find foreclosures, raise funds, and Kill the FEAR. So that you and your family can live the life you hope for your children and their children.
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