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3 Biggest Excuses For Investors To Avoid Buying Foreclosure
If you are fully committed to build up a real estate empire worth telling your grand kids about, then the foreclosure market is a place that you have to take a serious look at at some point in time.
It is one thing to find undervalued property in the open market.
But foreclosure homes are really where you find that diamond in the rough that is going cheap.
I believe that every real estate investor, new or old, will implicitly agree to that. Yet many have never wandered into the realm that is the market for foreclosure properties.
There might be a lot of legitimate reasons for people to avoid this chaotic market. But the most common ones are just excuses.
1) You need money to make money
While there is a lot of truth in this statement, it is nowhere near the whole truth.
Because even if you win the power ball sweepstakes, you still need money to buy that ticket.
So in a way, yes. It takes money to make money. But not the magnitude most people believe.
In real estate, we talk about leverage a lot.
Leverage allows an investor to acquire control of properties worth hundreds of thousands of dollars with a capital of just a few thousand dollars.
It’s more like you need other people’s money to make money.
You need a little startup capital. But you don’t need to invest $100,000 to make $100,000.
It’s not even close.
The thing is that you don’t need money to make money. It’s a myth.
What you need is knowledge, skills, and an ability to act decisively.
With foreclosure investing, there are practically scores of funding sources to choose from. And these sources might even beg you to take their money.
2) Only those with good credit will be able to borrow money
I can totally understand where this thinking came from.
Most of us think by default that when it comes to borrowing money, the bank is the only place to go to.
The truth is that there are hundreds, even thousands, of lenders out there waiting for investors to knock on their doors.
It’s just that we grew up thinking that banks are the only lenders with pockets deep enough to funds real estate investments.
And with that, we inevitably feel that good credit is one of the underlying criteria to access borrowed funds.
But that is too narrow a thinking.
A lot of lenders out there only lend to borrowers with bad credit! Some don’t even care about your credit history!
Even so, we often deal with highly motivated sellers in the foreclosure market. Many of them are so desperate to find a way out of a tough situation that they would be willing to fund your purchase themselves!
If that sounds wacky, then be prepared to see more of such deals once you get your feet wet in foreclosure acquisitions.
3) Buying foreclosure is like taking advantage of people’s misfortune
This belief is often due to the thinking that it is bad karma to buy the homes of others on the cheap.
That is a gross misunderstanding.
You are not trying to fool or trick anyone into selling. No one is being taken advantage of.
In fact, a lot of times, you are seen as a savior to the owner.
You are helping homeowners in a tight financial situation get out of it so that they can start afresh.
Look at it this way.
If you don’t do it, someone else will. And the seller might actually be worse off by dealing with a real shark.
All in all, foreclosures present a great opportunity for real estate investors to snag valuable property below market value.
It’s just another channel to find and acquire houses and apartments that can be profitable in the short and long term.
If building a considerable portfolio of valuable real estate is a goal, then the marketplace for foreclosures should definitely be a place that you should get acquainted with.