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Pre Foreclosure Investing - Rising Foreclosure Rates Are A Great Opportunity
By Colin Egbert
The current mortgage rate credit crisis is a golden opportunity for real estate investors to turn a quick profit, provided they're looking in the right areas of the country. Rising foreclosure rates are quickly becoming a problem for banks and communities across the country.
The President, Congress and the Federal Reserve working to make an amicable rate freeze on Adjustable Rate Mortgages to slow the problem. Yet, even with this effort a total of 437,498 foreclosures were filed in the first quarter of 2007. According to Realtytrac.com, this is an increase of 100,000 foreclosure filings compared to the first quarter of 2006. Imagine what the first quarter of 2008 holds for the real estate market!
Savvy business investors interested in pre foreclosure can turn these rising foreclosure rates into a golden opportunity. Investors can buy a record number of distressed properties in short sales deals, and flip them with minimal renovations for a high return.
States with the Highest Rates of Foreclosures
Areas such as Nevada, Colorado and Georgia are ripe with opportunities for pre foreclosure investing. According to realtytrac.com in 2007, these states reported an average of one foreclosure filing for every 75 households. That is triple the national average of pre foreclosure properties.
New real estate investors can find these pre foreclosure opportunities in even greater numbers in California, Florida and Texas. According to Realtytrac.com, these states have reported the largest totals of foreclosure filings in the country. California alone reported 80,595 foreclosure filings in the first quarter of 2007. This is double the number of foreclosures in the state with the second highest numbers of foreclosures, Florida which came in with 45,156 foreclosures in the first quarter.
Who’s to Blame?
Many real estate experts blame the rising foreclosure rates on the practice of subprime lending. Also known as near prime or second chance lending, this practice involves giving higher rate loans to homeowners with spotty credit, lower incomes and other problems that preclude them from better home mortgage loans. Naturally, these homeowners will have a harder time keeping up payments on their property mortgages.
This
unprecedented number of foreclosures has created a problem for the banks. Banks do not want to have foreclosed properties on their portfolios. They simply do not have the time or interest in maintaining these homes until they can be sold. In addition, banks must reserve enough cash to cover that mortgage should it foreclose entirely in every single one of those some 400,000 pre foreclosure properties in default. That’s millions, even billions of dollars that the banks can’t use to make their own profits on!
What it Means for Real Estate Investing?
As you can imagine the banks want to sell those properties, those mortgages or to have their homeowners to catch up bad loans. Investors can easily negotiate great short sales with the banks to pick up these pre foreclosures at a discount. Never before has pre foreclosure held so many opportunities for success.
Pre foreclosure is an excellent way to take advantage of these foreclosure filings. By negotiating with the banks on short sales deals you’ll be able to pick these properties before they are foreclosed on, and you’ll be helping the homeowner avoid bankruptcy.
Foreclosure rates are skyrocketing, and this is merely the first wave of a credit crisis that's been looming for the past three years. As other credit products eventually adjust to realistic market conditions, the number of opportunities for short sales on foreclosed properties is going to increase. Being a savvy investor, that's something you can capitalize on in pre foreclosure investing.
Learn more about protecting your short sale position at Realestateinvestor.com. We feature an instant network of investors, shortsalers and buyers for the real estate investor. In addition our real estate resources, tools, documents and videos are some of the most helpful one the web.
Colin Egbert is an experienced Real Estate Investor with plenty of short sale techniques to aid fellow investors in their quest to succeed and make huge profits. He's the author of the ebook "Getting Started with Short Sales" providing the tools needed to start your own real estate business. Colin is also the CEO of Realestateinvestor.com a website dedicated to helping investors make the most of their business.
Colin Egbert is an experienced
Real Estate Investor with plenty of short sale techniques to aid fellow investors in their quest to succeed and make huge profits. He's the author of the ebook "Getting Started with Short Sales" providing the tools needed to start your own real estate investing business. Colin is also the CEO of Realestateinvestor.com a website dedicated to helping investors make the most of their business.
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