How to Profit by Investing in Bankruptcies

There are many seasoned investors who will not look twice at bankruptcies because they feel the time and trouble it takes to put together the deal is not worth the profit.  This is a big mistake. There is money to be made by investing in bankruptcies.  You just need to understand it can make some very miserable people happy when you show them there is a solution.

By the time someone is ready to file bankruptcy, they have already come to the conclusion it is only a matter of time before they loose their home.  This is a very stressful situation.  The investor who is willing to tackle the problems of a property in bankruptcy can profit greatly. 

The lender is not wanting to go through the legalities of foreclosure.  The homeowner does not want the foreclosure on their credit file.  This is where you can step in and offer a solution.  One of the easiest ways to do this is bring the property to auction. This offers a solution to both the lender and the homeowner.  Not to mention you can make a profit as well.

The seller must first agree to the terms you set forth, so it is advisable to speak with them first. You will want to know as much about the property as you can find out.  You need to know what is owed, if there are any second mortgages or liens, and if the property taxes are current.  In many cases you will find the taxes are also behind.  You must stress to the seller the only way this system will work is with complete disclosure.  Any hidden costs can make the deal go bad in a minute.

The second thing you must do is make sure there is enough equity in the home to make it worth your trouble.  You do not want to try this technique with a property which has only a few thousand dollars equity.  You need a property which has at least $20,000 equity.  The more familiar you are with the way the deals work the more you can adjust this figure.

You will also need to speak to the lender to determine if they are willing to accept the offer you are making.  Many times you will find if the offer is legitimate, the lender will agree to the deal.  The next step is simple.  Sign and deliver.

Once all the paperwork is signed by the homeowner and the bank, with each party knowing what is happening, you will need to bring the property to auction.  The seller benefits because the deal offers them two things.  The burden of a foreclosure is lifted.  They also have some cash to be able to move into new home.  The lender is happy because they no longer have a non-performing loan on the books and have gotten the price they want out of the property.  You are happy because you have pocketed the difference.  This is one of many ways on how to profit by investing in bankruptcies.

Lisa Jones is a well trusted remax realtor college station,you can call on her to discuss with you in full the best possible options when considering investment in real estate college station.