Foreclosure Investing For Dummies

by Roberts, Ralph R.; Kraynak, Joseph

• ISBN13: 9780470122181
• ISBN10: 0470122188
• Edition: 1st
• Format: Paperback
• Copyright: 2007-05-29
• Publisher: For Dummies

Summary

Covers foreclosure rules and regs for all 50 states Minimize your risks and maximize your return, while assisting homeowners Want to buy and sell foreclosure properties? This hands-on guide covers all aspects of investing in foreclosures, from identifying potential properties and assessing value to carefully researching and inspecting properties, so you don't get stuck holding a money pit . . . or even worse, a worthless piece of paper! Discover how to deal with homeowners in preforeclosure, bid for a property, buy bank-owned properties at well below market value - and ultimately sell for maximum profit. Research property titles, mortgages, and deeds Build a strong investment team Obtain financing Network your way to success Avoid common pitfalls Invest with integrity

Author Biography

Ralph R. Roberts is a seasoned real estate professional and foreclosure expert who buys, rehabs, and resells homes.

Joe Kraynak is the author of more than fifty books, including Flipping Houses For Dummies.

Table of Contents

Introduction	p. 1
About This Book	p. 2
Conventions Used in This Book	p. 2
What You're Not to Read	p. 3
Foolish Assumptions	p. 3
How This Book Is Organized	p. 5
Prepping Yourself for Foreclosure Success	p. 5
Laying the Groundwork for Maximized Profit and Minimized Risk	p. 5
Creating Win-Win Situations in Pre-Foreclosure (Prior to Auction)	p. 6
Finding and Buying Foreclosure and Bankruptcy Properties	p. 6
Cashing Out Your Profit...after the Sale	p. 6
The Part of Tens	p. 6
Icons Used in This Book	p. 7
Where to Go from Here	p. 7
Prepping Yourself for Foreclosure Success	p. 9
Wrapping Your Brain around Foreclosure Investing	p. 11
Investigating the Foreclosure Process from Start to Finish	p. 12
Picking Your Point of Entry	p. 13
Scooping other investors during the pre-auction stage	p. 14
Bidding on properties at foreclosure auctions	p. 15
Buying properties after the sale	p. 16
Assembling a Team of Experts and Advisors	p. 17
Getting Your Financial Ducks in a Row	p. 18
Doing a Little Detective Work	p. 19
Finding foreclosures and seized properties	p. 20
Investigating the property's title and other documentation	p. 21
Inspecting the property with your own eyes	p. 22
Guesstimating a property's true value	p. 22
Investigating the situation and the homeowners	p. 23
Setting and Sticking To Your Maximum Bid	p. 24
Taking Possession of the Property	p. 24
Completing the essential paperwork	p. 25
Paying property taxes and insurance	p. 25
Convincing the current residents to move on	p. 26
Cashing Out: Realizing Your Profit	p. 26
Repairing and renovating the property to maximize its value	p. 27
Marketing and selling to get top dollar	p. 27
Cashing out equity by refinancing	p. 28
Profiting in other ways	p. 28
Getting Up to Speed on the Foreclosure Process	p. 29
Identifying the Foreclosure Process in Your Area	p. 30
Foreclosure by trustee sale	p. 30
Foreclosure by judicial sale	p. 30
Exploring the Missed-Payment Notice Stage	p. 31
Getting Serious: The Notice of Default	p. 31
Proceeding to the Foreclosure Sale	p. 32
Halting the Foreclosure Process	p. 33
Reinstating the mortgage	p. 33
Requesting and receiving a forbearance	p. 33
Mortgage modification or repayment plan	p. 34
Filing for bankruptcy	p. 35
Agreeing to a "deed in lieu of foreclosure"	p. 35
Getting one last chance during the redemption period	p. 36
Finalizing the Foreclosure: Ushering the Previous Owners Out the Door	p. 38
Picking Your Point of Entry in the Foreclosure Process	p. 39
Dipping In at the Pre-Auction Stage	p. 40
Exploring the pros and cons of pre-auction foreclosures	p. 40
Guiding homeowners to good decisions	p. 41
Dealing with anger and angst	p. 42
Assessing your ability to deal with pre-auction scenarios	p. 43
Pursuing Foreclosure Notices	p. 44
Knowing the benefits of waiting for the foreclosure notice	p. 44
Weighing the drawbacks of waiting for the foreclosure notice	p. 45
Wrapping up your deal before the sale	p. 46
Bidding for a Property at a Foreclosure Auction	p. 46
Weighing the pros and cons of buying at auctions	p. 48
Setting a maximum bid well in advance	p. 49
Putting on your poker face	p. 49
Acquiring Properties after the Auction	p. 50
Scoping out REO properties	p. 50
Finding and buying government properties	p. 51
Buying properties from other investors	p. 52
Waiting Out the Redemption Period - If Necessary	p. 52
Laying the Groundwork for Maximized Profit and Minimized Risk	p. 55
Building a Powerful Foreclosure Investment Team	p. 57
Lawyering Up with a Real Estate Attorney	p. 58
Teaming Up with a Good Moneyman - or Woman	p. 59
Consulting a Title Company to Cover Your Back	p. 60
Hiring a Tax-Savvy Accountant	p. 62
Lining Up a Home Inspector	p. 63
Contacting Contractors and Subcontractors	p. 64
Hiring a general contractor - or not	p. 65
Tracking down top-notch contractors and subcontractors	p. 66
Contracting with contractors and subcontractors	p. 66
Finding a handyman and other helpers	p. 68
Insuring your helping hands	p. 68
Selling Your Property for Top Dollar through a Seller's Agent	p. 68
Recognizing the value of a seller's agent	p. 69
Picking an agent with the right stuff	p. 70
Assessing the Pros and Cons of Partnerships	p. 71
Filling Your Foreclosure Tank with Financial Fuel	p. 73
Estimating Your Cash Needs	p. 74
Finding a Cash Stash: Knowing Your Financing Options	p. 75
Borrowing Against the House You're Buying	p. 77
Shaking Your Piggybank: Tapping Your Own Resources	p. 79
Examining the pros and cons of using your own money	p. 80
Totaling your sources of investment capital	p. 80
Planning for contingencies	p. 83
Financing Your Venture with Conventional Loans	p. 83
Making yourself look good on paper	p. 84
Gathering the paperwork and records you need	p. 87
Comparison Shopping for Low-Cost Loans	p. 87
Networking Your Way to Foreclosure Success	p. 89
Grasping the Power of Networking	p. 89
Generating leads on profitable pre-auction properties	p. 90
Securing your financing	p. 91
Tracking down reliable, affordable professionals	p. 92
Selling your house for more money in less time	p. 92
Realizing the Importance of Being Good	p. 93
Acting with integrity - always	p. 93
Investing in quality craftsmanship	p. 94
Building thriving communities	p. 94
Marketing Yourself	p. 95
Gathering your marketing tools	p. 95
Starting with your inner circle	p. 97
Keeping in touch...a daily chore	p. 97
Managing Contact Information	p. 98
Rewarding Good Deeds and Good Leads	p. 99
Creating Win-Win Situations in Pre-foreclosure (Prior to Auction)	p. 101
Discovering Homeowners Facing Foreclosure	p. 103
Networking Your Way to Promising Properties	p. 104
Identifying your personal lead generators	p. 104
Getting the word out on the streets	p. 107
Scoping Out the Neighborhood for Dontwanners	p. 108
Searching for FSBO Properties	p. 108
Finding Foreclosure Notices	p. 109
Tracking down local publications	p. 110
Getting on the mailing list	p. 110
Subscribing to commercial foreclosure information services...or not	p. 111
Deciphering a foreclosure notice	p. 111
Building a Property Dossier	p. 113
Collecting Essential Information about the Property	p. 114
Honing your title acquisition and reading skills	p. 114
Picking details off the foreclosure notice	p. 116
Digging up details at the register of deeds office	p. 121
Gathering tax information at the assessor's office	p. 126
Getting your hands on the property worksheet	p. 126
Gathering additional information	p. 127
Doing Your Fieldwork: Inspecting the Property	p. 128
Doing a drive-by, walk-around inspection	p. 128
Snapping some photos	p. 130
Assembling Your Dossier: A Checklist	p. 131
Contacting the Homeowners and Lenders	p. 133
Scheduling Your Foreclosure Activities	p. 134
Contacting the Homeowners Directly	p. 137
Tracking down the homeowners	p. 137
Kicking off your mail campaign	p. 138
Getting in touch over the phone	p. 144
Adding the Homeowners' Profile to Your Property Dossier	p. 147
Laying Out All Available Options	p. 147
Reinstating the loan	p. 149
Negotiating with the lenders for a forbearance	p. 150
Refinancing the mortgage	p. 151
Listing the property	p. 151
Selling short	p. 152
Accepting your cash offer	p. 152
Refinancing through you	p. 152
Leasing the property after selling it	p. 153
Selling the home and renting it back	p. 153
Giving a deed in lieu of foreclosure	p. 154
Filing for bankruptcy	p. 155
Waiting (and saving) during redemption	p. 155
Doing nothing	p. 155
Getting Inside to Take a Look Around	p. 156
Contacting the Lenders	p. 156
Contacting the senior lien holder	p. 158
Contacting the junior lien holders	p. 158
Analyzing the Deal and Presenting Your Offer	p. 161
Completing the Deal Analysis Worksheet	p. 161
Calculating the homeowners' equity in the property	p. 162
Calculating your top cash offer	p. 165
Logging the loan status	p. 166
Determining options based on LTV (loan-to-value)	p. 166
Assessing the homeowners' credit health	p. 167
Gauging the homeowners' wants	p. 168
Determining the homeowners' gross monthly income	p. 168
Assessing the Homeowners' Options	p. 168
Presenting Your Offer: The Purchase Agreement	p. 170
Closing Time	p. 172
Finding and Buying Foreclosure and Bankruptcy Properties	p. 175
Bidding for Properties at a Foreclosure Sale	p. 177
Tracking Down Auction Dates, Times, and Places	p. 178
Preparing Your Maximum Bid	p. 179
Guesstimating the property's improved value	p. 180
Estimating repair and renovation costs	p. 180
Figuring in holding costs	p. 180
Subtracting agent commissions and closing costs	p. 181
Arriving at your maximum bid amount	p. 182
Bidding at a Foreclosure Auction	p. 184
Packing for an auction	p. 185
Sitting in on a few auctions	p. 186
Crafting a winning bidding strategy	p. 186
Submitting sealed bids	p. 187
Following Up...After the Auction	p. 188
Buying Repos: Bank Foreclosures and REO Properties	p. 193
Acknowledging the Drawbacks of REO Opportunities	p. 194
Getting Up to Speed on the REO Process	p. 195
Shaking the Bushes for REO Properties	p. 196
Positioning yourself as an attractive investor	p. 196
Hooking up with REO brokers	p. 196
Getting connected with REO A-listers	p. 197
Tracking the property through the REO stage	p. 200
Working your way to the better deals	p. 200
Following up with homeowners during redemption	p. 201
Inspecting the Property	p. 201
Timing Your Offer for Optimum Results	p. 202
Acting quickly after the auction	p. 203
Timing your move with the redemption period	p. 203
Tuning in to the lender's fiscal calendar	p. 204
Waiting for the broker to list the house	p. 205
Pitching an Attractive Offer	p. 205
Sizing up the lender's needs	p. 205
Re-evaluating your needs	p. 206
Drawing up an offer in writing	p. 207
Closing on the deal	p. 209
Finding and Buying Government Repos	p. 211
Bargain Hunting for HUD (Housing and Urban Development) Homes	p. 212
Weighing the pros and cons of HUD homes	p. 213
Hooking up with a HUD-approved agent	p. 213
Finding HUD homes online	p. 214
Finding and Buying VA Repos	p. 215
Profiting from Fannie Mae and Freddie Mac Properties	p. 216
Tapping into Freddie Mac's home clearinghouse	p. 217
Shopping for Fannie Mae properties	p. 218
Buying FDIC properties	p. 219
Finding and Buying Government-Seized Properties	p. 219
Buying properties at tax sales	p. 220
Avoiding the tax lien sales gurus	p. 220
Buying properties from the IRS	p. 221
Contacting your county treasurer's office	p. 222
Taking a trip to the department of transportation	p. 222
Finding government-seized property online	p. 223
Banking on Bankruptcies	p. 225
Brushing Up on Bankruptcy Laws	p. 226
Selling assets through Chapter 7 bankruptcy	p. 226
Restructuring debt through Chapter 13 bankruptcy	p. 226
Knowing When to Purchase	p. 227
Tracking Down Houses in Bankruptcy	p. 229
Skimming publications for bankruptcy notices	p. 229
Researching bankruptcy filings	p. 230
Networking with the gatekeepers	p. 230
Dealing with the Gatekeepers	p. 232
Cooperating with bankruptcy trustees	p. 232
Teaming up with bankruptcy attorneys	p. 232
Getting the homeowners on your side	p. 233
Getting the creditors on your side	p. 233
Dealing with Bankruptcy Delays on a House You Bought	p. 234
Sampling Some Other Foreclosure Strategies	p. 237
Negotiating Short Sales	p. 237
Knowing the lien holder pecking order	p. 238
Wheeling and dealing with lien holders	p. 240
Recognizing a short sale opportunity	p. 241
Teaming up with the homeowners	p. 242
Gathering payoff amounts	p. 243
Crunching the numbers	p. 243
Negotiating with the lien holders	p. 245
Buying and Selling Junior Liens	p. 249
Buying junior liens to foreclose for a quick payday	p. 250
Buying seconds to protect the first mortgage	p. 251
Selling a junior lien for a profit	p. 252
Profiting from Property Tax Sales	p. 252
Tracking down property tax sales	p. 253
Finding golden tax sale opportunities	p. 254
Buying tax deeds or certificates?	p. 255
Getting redeemed out of your position	p. 255
Profiting from the tax lien or deed	p. 256
Cashing Out Your Profit...after the Sale	p. 257
Assisting the Previous Homeowners Out the Door	p. 259
Tying Up the Loose Ends after the Purchase	p. 260
Closing on a pre-auction purchase	p. 260
Tying up the loose ends after the auction	p. 261
Protecting Your Investment through Redemption	p. 262
Maintaining the property's status quo	p. 262
Securing the property	p. 263
Keeping hungry investors at bay	p. 264
Planning Repairs and Renovations	p. 266
Evicting the Residents when Time Runs Out	p. 267
Repairing and Renovating Your Investment Property	p. 269
Choosing a Renovation Strategy	p. 269
Planning Repairs and Renovations	p. 270
Calculating the return on your investment	p. 271
Roughing out your budget and schedule	p. 272
Giving Your Property a Quick Makeover	p. 274
Freshen the exterior	p. 274
Gussy up the interior	p. 275
Tidy up the kitchen	p. 276
Scour the bathrooms	p. 276
Spiff up the bedrooms	p. 276
Make the basement tolerable	p. 277
Attend to the mechanicals	p. 277
Investing in High-Profile Rooms: Kitchens and Baths	p. 278
Cooking up a remodeled kitchen	p. 278
Adding Valuable Features	p. 280
Cashing Out: Selling or Leasing Your Property	p. 281
Selling Through a Qualified Real Estate Agent	p. 282
Selling faster for a higher price	p. 282
Choosing a top-notch seller's agent	p. 284
Staging Your House for a Successful Showing	p. 285
Jazzing up the front entrance	p. 285
Decluttering the joint	p. 286
Adding a few tasteful furnishings	p. 286
Appealing to the senses	p. 287
Generating Interest Through Savvy Marketing	p. 287
Negotiating Offers and Counteroffers	p. 289
Comparing offers	p. 289
Mastering the art of counteroffers	p. 290
Closing the Deal	p. 291
Becoming a Landlord	p. 292
Checking Out Other Cash-Out Strategies	p. 295
Refinancing to Cash Out the Equity	p. 295
Reselling the Property to the Previous Owners...Or Their Family	p. 296
Reselling to the previous owners	p. 296
Financing the buyback through insurance policy proceeds and other means	p. 299
Leasing the Property to the Foreclosed-Upon Homeowners	p. 299
Offering a Lease-Option Agreement	p. 300
Assigning Your Position to a Junior Lien Holder	p. 302
The Part of Tens	p. 305
Ten Common Beginner Blunders	p. 307
Having Insufficient Funds on Hand	p. 307
Overestimating a Property's Value	p. 308
Underestimating Your Holding Costs	p. 308
Overbidding in the Heat of Battle	p. 309
Failing to Investigate the Title	p. 309
Failing to Inspect the Property with Your Own Eyes	p. 310
Bidding on a Second Mortgage or Junior Lien	p. 310
Renovating a Property before You Own It	p. 311
Trusting What the Homeowners Tell You	p. 311
Getting Greedy	p. 312
Ten Ways to Maximize Future Leads by Acting with Integrity	p. 313
Stopping the Bleeding: Providing Basic Financial Advice	p. 313
Assisting Homeowners in Their Job Search	p. 314
Suggesting That the Homeowner Seek Help from Family and Friends	p. 314
Encouraging the Homeowners to Contact Their Lenders and Soon	p. 315
Suggesting Short Sales and Other Debt Negotiations	p. 316
Assisting Homeowners in Assessing Their Refinance Options	p. 316
Suggesting the Option of Selling the House before Foreclosure	p. 317
Bringing Up the Bankruptcy Option	p. 317
Offering a Helping Hand	p. 318
Revealing the Option to Walk Away	p. 319
Ten Tips for Avoiding Common Foreclosure Minefields	p. 321
Steering Clear of Foreclosure Investment Scams	p. 321
Researching the Title Yourself	p. 322
Inspecting the Property with Your Own Eyes	p. 322
Knowing What You're Bidding On	p. 322
Setting Realistic Goals	p. 323
Muffling Your Emotions	p. 323
Investing with Integrity	p. 324
Anticipating Delays	p. 325
Foreseeing Unforeseen Expenses	p. 325
Dealing with the Blame and Guilt	p. 326
Foreclosure Rules and Regulations for the 50 States	p. 327
Alabama	p. 328
Alaska	p. 328
Arizona	p. 329
Arkansas	p. 329
California	p. 330
Colorado	p. 330
Connecticut	p. 330
Delaware	p. 331
District of Columbia	p. 331
Florida	p. 332
Georgia	p. 332
Hawaii	p. 332
Idaho	p. 333
Illinois	p. 333
Indiana	p. 334
Iowa	p. 334
Kansas	p. 334
Kentucky	p. 335
Louisiana	p. 335
Maine	p. 335
Maryland	p. 336
Massachusetts	p. 336
Michigan	p. 337
Minnesota	p. 337
Mississippi	p. 337
Missouri	p. 338
Montana	p. 338
Nebraska	p. 339
Nevada	p. 339
New Hampshire	p. 340
New Jersey	p. 340
New Mexico	p. 340
New York	p. 341
North Carolina	p. 341
North Dakota	p. 342
Ohio	p. 342
Oklahoma	p. 342
Oregon	p. 343
Pennsylvania	p. 343
Rhode Island	p. 343
South Carolina	p. 344
South Dakota	p. 344
Tennessee	p. 344
Texas	p. 345
Utah	p. 345
Vermont	p. 346
Virginia	p. 346
Washington	p. 346
West Virginia	p. 347
Wisconsin	p. 347
Wyoming	p. 348
Index	p. 349
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