All these foreclosed properties offer you a great investment opportunity. You can scout and buy homes in foreclosure, then keep them as rental properties and collect monthly checks from tenants. Or you can purchase foreclosed properties and flip them, renovating and selling the homes for a profit. The time has never been better to use the real estate market to your advantage.I was recently sent a free copy of a great foreclosure book by a real estate pro by the name of Denise Evans. Her book, The Make Money on Foreclosures Answer Book: Practical Answers to More Than 125 Questions on Investing in Foreclosure Property is a straightforward, easy-to-follow guide to making money from foreclosures.

A quick and authoritative reference, the book explains all the elements of the foreclosure process and reveals everything you should keep in mind as you deal with foreclosed properties. The Make Money on Foreclosures Answer Book answers the most common questions about working with foreclosures, covering such topics as:

• Finding properties to buy
• Borrowing money to fund your purchase
• Determining your costs
• Buying pre-foreclosures and buying at auction
• Buying through a bank or the government
• Tax and legal issues
• Bankruptcy
• Dealing with the property’s former owner

Written by a real estate broker and attorney with over twenty years’ experience making money in the real estate market, The Make Money on Foreclosures Answer Book reveals insider tips and strategies that will help you buy foreclosure properties safely and sell them to earn a profit. Check it out on Amazon to buy or read more about it.

About the Author
Denise L. Evans received her law degree from the University of Alabama Law School. She is a licensed real estate broker, an active member of the Commercial Real Estate Club of Birmingham, and a research associate for the Alabama Real Estate Research and Education Center. She resides in Tuscaloosa, Alabama.

It’s not often you get such a nice compiled list of resources all on one page so you might want to bookmark it and refer to it at a later time. Their site also provides international real estate for sale. Thanks to Brian for sending me the link.

One alternative is joining an online lending community where people can borrow and lend money essentially bypassing the banks thus getting better rates. You’d be the lender and sites like Prosper.com (aff) and Lendingclub.com would help you build diversified portfolios based on lender preferences. They speak of returns anywhere from 9% to 14% all depending on the amount of risk you decide to take. Here’s an example (aff) of how it works. Lendingclub also has a blog which has some good financial articles.

I think it’s a pretty good idea if you’re looking for a higher return and want a place to park your money until the real estate market settles down. I have signed up for a prosper.com account and started browsing the borrowers but have not yet loaned any money out. If you’ve used either one of these sites before, please let me know how it’s worked out for you.

This tends to be glossed over by many who promote zero-down ways to buy real estate. If you are buying a home for yourself, so what if you get in with nothing down. You also want to be sure that it makes more sense than the alternatives (renting, waiting, lease-option, etc.). If you are investing in real estate, you want a property that will have cash flow or can be sold for a profit. With those criteria in mind, here are a few ways to do it without your own money.

No Money Down – Starting With Land

One of the easiest types of real estate to buy with nothing down is land or small lots. In many areas of the country it is common for sellers to sell these properties with a small down payment or none at all. Of course, one of the reasons they do this is because it is an easy way to get more for the land. I once bought a piece of land for cash and resold it in weeks for 30% more, because a lot of buyers could afford my terms: $250 down and $100 per month. So be sure that you are not paying too much.

“Too much” doesn’t necessarily mean paying a lot over “market value” however. It is determined by what you will do with the property. For example, if you have no other way to buy a small lot, and as a result of the easy terms offered by the seller you pay $12,000 for a lot worth just $9,000, is that too much? Not if you will later put a modular on it and make a $21,000 profit selling the package.

Now you might notice that many of the lots and parcels of land for sale are not offered with no down payment. Most sellers will at least want something at closing, even if it is only $1,000 down on an $8,000 lot. So how do these become “nothing down” deals? By borrowing for the down payment. In the above example, where you eventually make $21,000, what if you borrowed the down payment on a credit card at 18% interest, and it took a year to do the deal? Then you would make $210 less ($30 cash advance fee and $180 interest), or just $20,790 profit.

Land is also a way to get into a home with no money down. When you buy real estate this way, you can pay for the lot over a few years, and then use it as the equity necessary to get a home loan. many banks will loan you the money for a modular or stick-built home if you already own the land free and clear.

100% Financing

If you have a good credit score, you might still be able to get a 100% mortgage loan. They are getting less common now (late 2007), but I still see an occasional advertisement for them. Alternately, you might find a lender who will loan 90% and still let the seller finance the other 10% on a second mortgage, meaning none of your cash is necessary.

If you are investing in real estate, you might get 100% financing from a “hard money” lender. These lenders charge high fees and high interest, but the idea is that you use them for high -profit deals that make it worth it. Other investors may put up the money for the down payment and repair costs on a fixer upper project, if you find the right deals. This can be at a high interest rate, or for a share of the profits.

Buy Real Estate From Motivated Sellers

If you stick to properties that have highly motivated sellers, there is usually a way to buy with no money down. For example, a seller might sell his $90,000 house to you with only $3,000 down if you offer him $95,000 and a good interest rate. You can borrow the $3,000 of course (or even a little more to cover closing costs, if you want nothing at all into the deal).

Sellers have been known to take cars or other pieces of property as a down payment. They may let you buy with two mortgage notes, one for 20% and the other for 80%, one of which they’ll immediately sell to get the cash they want. To buy real estate with no money down, just look for a way to get the seller (and the lender, if necessary) what he needs – without using your cash.

It is vital that a Real Estate agent or broker must be very well connected to the Real Estate industry and also have great know-how about the way the industry works. Every client will expect the Real Estate agent to have a deep knowledge about the market, and the broker will have to give information on the present Real Estate listings, earlier sales, he should have an efficient and practical marketing strategy and some good references. It is of prime importance that people look for a Real Estate agent who is sincere, confident, and who completely understands the requirements of both buyers and sellers.

In the United States, the Real Estate brokers and their sales people are called Real Estate agents, and they help property sellers in selling their homes and marketing it on the best terms at the best premium price. When Real Estate agents act on behalf of the buyer of a property, they work under a signed agreement, and help the buyers purchase the property on the best terms at the lowest possible price. The agents earn their commission after the sales proceedings have been completed. When working without a signed agreement, the broker may help the buyer to the property, but is free to still represent the property seller and work with the seller’s best interests in his mind.

There are certain differences between a salesperson and a licensed Real Estate agent. After acquiring a few years’ worth of experience in Real Estate sales, a salesperson might choose to become a licensed Real Estate agent. In order to become a full-fledge broker, a lot more course work and a state licensure examination on Real Estate law has to be passed first. When a salesperson gets a Real Estate agent’s license, he can continue to work for another agent in the same capacity as he used to, or he could decide to set up his own brokerage firm and hire his own salespersons.

Most buyers usually ask their friends and relatives and business colleagues who have recently purchased a house in their preferred area to recommend or suggest a Real Estate agent or broker. Some buyers directly approach a realty office and some look through newspapers advertisements. People also come upon good agents when they visit an open house. You should interview several brokers till you find one you like, who is familiar with the area you’re interested in, who caters for houses in your price range, knows the local market situation, knows about what’s cool in that community, etc. It is important that you should feel comfortable with your broker.

By William King

Aside from being able to use it to invest in your new or current home, there are numerous advantages to using a FHA loan. First and foremost is the ease with which one can qualify for a FHA loan as opposed to more traditional types of loans. Because the FHA is simply guaranteeing your loan lenders will be more inclined to give you the loan you need to refinance your home. This means that lenders have considerably less to lose by extending you a loan, because if you do go into default and they do have to foreclose they will get their money back.

Another reason FHA loans are easier to get is due to the relaxed requirements. Good or perfect credit is not required by the FHA for one of their backed loans, which makes it a strong alternative to traditional loans, especially since typically predatory lending practices have come under increased public and political scrutiny.

Two more advantages of a FHA are the lower interest rates, which translates directly to no or low down payments. The lower interest rates means your monthly payments will be considerably lower. So much so that you can afford to finance more of the home and pay less in the down payment. Sometimes you can even finance the entirety of the home and won’t need a down payment at all.

For more information on FHA loans and how they can help you invest in your new or current home visit HUD’s website or this handy FHA Mortgage Guide I spotted on MortgageLoanPlace.com.

Post contributed by Brandon Laughridge

His email goes as follows:

Hello Mr. Cowgill,

I was looking up some articles this morning and found your’s at American Chronicle, as well as your blog. I answered those questions, and figured out that I was lacking the motivation to get started.

A little about myself: I am graduating senior, set to walk the stage in mid June. I will be getting my BS in business administration, and for the last year and a half, I have been reading up a lot on real estate investing.

I have read a lot of the Donald Trump books (I love his philosophy on life and real estate), and recently I just finished Napoleon Hills “Think and Grow Rich.” I read articles on CRE Online (just found that site to), dealmakerscafe.com (thats how I figured out I was a “fence sitter”), and other websites.

At this point I want to get started, but do not know where to go. I am interested in wholesaling and short sales, but for the last week I have been itching do start, but do not know what step to take first.

Real estate investing is somethings that I am certain I will be passionate about, and somethings that I do desire to accomplish. I would appreciate any and every bite of knowledge and wisdom that you would be willing to give to me.

Now Jack reached out to me since I’m an expert in the field. He’s someone I’d like to help get started and here is my response:

Jack, Thanks for the email. I’m glad you’re getting involved in real estate investing at such a young age. Most of the friends I graduated with didn’t see the big picture or reward of investing in real estate and rightfully so. It doesn’t pay the bills right out the gate and how does one come up with money to buy property?

So with saying that, I will agree — the most difficult hurdle to jump over especially coming straight out of college, is finding a source of financing. I of course don’t know your financial situation nor do you need to tell me but let’s just assume you’re either paying off student loans or have less than $1,000 in the bank (that’s what my situation looked like).

I’m going to give you three answers I think can help you best ranked by difficulty. All of them are correct and work, it’s just up to you to pick one.

Simplest Way (easiest to follow through with but takes longer)
Become more knowledgeable and learn the tricks of using other people’s money to finance your deals. Books such as “Investing in Real Estate with Other People’s Money” by Jack Cummings provide 43 tricks (not all which I agree are for most investors)

Intermediate Way (a little more difficult to accomplish but more powerful)
Find a mentor who’s willing to take you under their wing. This can be a real estate agent, investor, Donald Trump, etc. Someone who’s gone down this road before and knows how to get started. You can find people like this online or in the newspaper advertising “We Buy Houses”. Chances are you won’t be paid at first but there’s no better way to learn.

Aggressive Way (more risky but a quick way to get some financing)
Go directly to your local bank and apply for a business loan. Tell them you’re a real estate investor looking for some capital to start you business. That’s exactly what you’re doing. Starting a business of buying property. Another alternative for a short-term high interest loan is to contact a hard money lender. These guys are great if you want to get a loan for a wholesaling deal or a flip it property.

Jack I hope my answers helped you and I’m interested to hear your feedback. Feel free to ask any further questions since you’re not the only one having trouble getting started. Keep up the hard work and you’ll have your first property in no time!

Now I’ve been down this road for several of my investment properties which is usually the way you need to start but as you become more experienced you start to learn some additional tricks of the trade. There’s nothing wrong with getting loans from commercial banks but what you do if you have bad credit or are currently out of work?

The financing technique I’m going to talk about is unknown to most new real estate investors and is what’s called ‘owner financing’. It’s one of the best sources of capital for your real estate purchase and in an ideal world, every real estate purchase you make would be with owner financing. It provides benefits such as low risk, an endless supply of funding, and great terms — what more could you ask for?

So what is owner financing? Basically it’s where the seller of the property deals directly with you instead of using a bank for the loan. The seller acts as the bank and essentially provides you a loan without charging points or unnecessary bank fees. For example, one of my Albuquerque properties is seller financed and I only put down 10% cash and created a note for the remaining 90%.

I wanted to close quickly since it was a good deal and I didn’t have to get preapproved for a loan, have my credit checked, deal with the slow process of working with a bank or a lending broker, or get charged unnecessary fees.

In summary, here are the advantages of owner financing:

• Easy qualification – you don’t need traditional lender income and credit approval to get a loan. Useful for people with poor credit or lack of provable income
• Cheaper costs – you don’t have to pay points, origination fees, underwriting charges, appraisal, credit reports, and all the other junk fees charged by conventional lenders which can add up to thousands of dollars at closing.
• Faster closing – an owner finance transaction can close in a matter of days. There is no lender approval or other delaying factors to hold you back.
• Less risk – large institutions or banks will allow you to make a late payment without hurting your credit rating. This is not to say owner financing will prevent that but it will definitely be more flexible censure dealing with an individual versus a bank.

Now in order to take advantage of seller financing you need to make sure the seller is even willing to take this route. If the seller is also a real estate investor, it’s likely he has several properties and can float you a loan versus an individual who’s looking to roll his profits into another property. I would say that 80% (if not more) of all sellers will either not understand how seller financing works or not be willing to do it because they need the money right away to invest in something else. If you happen to find a seller who’s interested in seller financing, I highly recommend you pursue it (assuming the terms are fair).

Remember, even if this is your first investment property purchase, it doesn’t hurt to ask the seller if he’s interested in carrying the loan. Regardless, be prepared to have a backup plan with a preapproved letter from your local bank or lending institution so you can move swiftly if the property is right for you.

In my situation when I purchased my first investment property in Las Vegas, I used a mortgage broker which was extremely helpful. Mortgage brokers generally charge 1% of the loan amount to help locate a quality funding source for you. My new mortgage broker charged a $500 fee upfront and then worked on getting a point or two on the back-end with whichever lending house or bank he ended up working with.

Now most mortgage brokers are there to help you but I must warn you – from past experience – not all brokers are going to be honest. Mortgage brokers are your typical salesperson with specific incentives to make more money. They may charge you a small fee upfront but not necessarily find the best loan program for you.

For example, say there were two banks that your broker was deciding between for your loan program. The first bank offered a 6.5% 30 year fixed loan with a bonus of $5,000 for the broker. The second Bank offered a 6.25% 30 year fixed loan with no bonus. Which of the two do you think you’re mortgage broker will offer you?

The best solution is to find a broker that is recommended to you by a friend or family member. Somebody that you can trust and not have to question their loan programs. Regardless, if I were you I would still ask to see the details and specifics on each loan program available for you. These mortgage brokers are legally required to show you all commissions or monies going in or out of the deal. They of course are not going to offer this to you upfront but it’s there if you wish to ask for it.

Despite my bad experience with one broker doesn’t mean the majority of them are evil. It’s just that one or two that gives them a bad name. Overall I highly recommend using a trusted and well established mortgage broker versus trying to work with a bank or lending house directly. They basically do all the leg work for a small fee and have access to numerous sources of information as to which loan program would be the best for your situation.