No Foreclosure Start up Cash? No Problem...
If you are considering going into the foreclosure business now is a great time. This past summer of 2007 proved to be a record year for foreclosures as is availability of below market value homes available for foreclosure investors.
TRAINING RESOURCE:This e-book is a great resource for those looking to simply "FIND and ASSIGN" foreclosure deals - Find and Assign foreclosure deals . This book teaches you step-by-step how to generate cash flow without having to hold or re hab properties.
Lets look at a common WIN-WIN deal situation that allows the home owner to get out of their mortgage obligation, save their credit and you the foreclosure investor make a handsome profit.
You've located a property where the owner is behind on mortgage payments and no retention options are possible. The only foreclosure strategy is liquidation which will seperate the borrower from the mortgage. Consequently, the property must be sold or else the borrower will have to file for bankruptcy and destroy their credit.
Basic details:
-The borrower owes $225,000 on the loan
- The home has appreciated will easily sell for $400,000.
- You offer the borrower $260,000 which releases them from the debt
- You will invest $20,000 to cover rehab and fix-up
- Borrower signs a sales agreement accepting the offer.
So, you just offered the borrower a fantastic solution to a potentially financially devastating situation and he willingly accepted.
The borrower will pocket 35k at the closing and be completely separated from the loan obligation.
Rough cash flow worksheet: ( after you sell the house)
Selling price + $400,000
Pay off on new loan - $260,000
Payoff to borrower - - $35,000
Rehab fix up -$20,000
Your Profit: + $85,000
One big problem.
You need to come up with 35K plus the 20k for fix up to complete the deal because you have NO CASH.
You CAN close this deal.
Just because you don't have the cash to payoff the borrower or do the fixups doesn't stop you because you have the most important element of the deal.
This key element of the deal is the signed sales agreement for $260,000 on a home that will sell for $400,000.
Do you think investors with cash would like to get there hands on this deal? You bet.
They would be more than willing to pay you 15k, 20k for the trouble of sourcing this deal.
This is one great strategy for beginning foreclosure investors with limited cash flow to start doing deals and turn profits within 2-3 months.
Learn how to source: NO Cash Deals: Foreclosure Learning Resources
Read More: Foreclosure opportunity stages
Read More: Finding Foreclosure Properties