Here are the reasons…

1. High Sellers’ Motivation – due to potential loss of their home, equity, credit, etc.
2. Sellers’ Deadline – deadline helps the decision making
3. Lenders’ Motivation – huge discounting possibilities
4. Creation of HUGE Equity Spreads – due to all of the above
5. Possibilities of using OPM – you can use “other people’s money” – take over the bank financing, or having the seller carry back portion of their price.
6. No Money Down Deals – put under contract at a good discount and wholesale it quickly.

• Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a piece of real property due to the owner’s default on its promissory note. When the process is complete, it is typically said that “the lender has foreclosed its mortgage or lien.”
• The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
• Legal process by which a mortgagor of real property is deprived of his interest in that property due to failure to comply with terms and conditions of the mortgage.
• The forced sale of property pledged as security for a debt that is in default.

Over half of the states in the United States use mortgages as security instruments. The other states use a deed of trust, which serves the same purpose, but with a few important differences. Let’s define each of these two important documents used in the foreclosure process.

MORTGAGE: What is a Mortgage?

Most of us are accustomed to calling our home loan a mortgage, but that isn’t an accurate definition of the term. A mortgage is not a loan, and it is not something that the lender gives you. It is a security instrument that you give to the lender, a document that protects the lender’s interests in your property.

There are two parties to a mortgage:

• the mortgagor – the borrower, and
• the mortgagee – the lender

A mortgage document creates a lien on the property, which serves as a lender’s security for the debt. The lien is recorded in public records, at your county courthouse.

Even if your loan is secured by a mortgage, you still have full title to the property. No one else has rights of ownership. A mortgage gives the lender the right to sell the secured property to recover funds if you do not pay the debt.

When a mortgage is used for security, foreclosure must usually progress through the court system. That type of foreclosure is called a judicial foreclosure.

DEED OF TRUST: What is a Deed of Trust?

A deed of trust serves the same purpose, but with a few important differences.

A deed of trust is a special kind of deed that is recorded in public records, where it tells everyone that there is a lien on property. Since deed of trust contains a power-of-sale provision, the deed of trust lender can sell the property at a trustee’s sale – without prior review by court. That process is called a non-judicial foreclosure.

A deed of trust involves three parties. The borrower who is the trustor, the lender is the beneficiary, and a third party is the trustee.
A trustee is someone who holds temporary (but not full) title until the lien is paid.

The trustee should be a neutral third party, someone who won’t favor either you or the lender if problems crop up. In some states, attorneys act as trustees, and in others, title insurance companies often provide the service.

The trustee cannot take your property for no reason–documents are in place to protect against that.
The deed of trust is cancelled when the debt is paid.

Without a doubt getting into real estate investing is sure to prove to be a very profitable exercise because people that have entered into this line of business have made tons of money. However, there is more to real estate investing than simply making money because you should also derive pleasure from your pursuit of investing in real estate. The truth of the fact is that wholesaling homes is a way of investing that lays the foundation for all other types of real estate investments and it is also a means whereby you can earn some quick cash.

Little Capital Required — Flipping (Wholesaling Homes)

In fact, it is quite common to earn as much as ten to fifteen thousand dollars per month from wholesaling homes and all it takes is to work as little as twenty hours in the week and without having to work over the weekends. If you are thinking about real estate investing you should also consider wholesaling homes because it is a great business that does not require much capital and there is also little need to get credit and, best of all, it is quite simple to learn the ropes. All you would need is having an investor list or two and within a short span of time you could be making good money.

As far as wholesaling homes and real estate investing go, it requires nothing more than to get control of properties, which are then marketed and sold to the investors that have enough cash. It is also a lot better way of making money than say, rehabbing properties in which you would need to wait six to eight months before you realize any serious money.

Essentially, wholesaling homes require that you locate lucrative looking deals and it also means having to market these homes mainly to those who are involved in rehabbing as well as retailing properties. The fact of the matter is that first buyers are always on the lookout to make a small though quick profit and will generally pass over the bigger profits to those who are indulging in real estate investing because they do not have the time, money and patience to repair properties that they have bought. And they also don’t wish or cannot afford to wait for months until the property can be sold after it has been properly rehabbed.

Thus, if you were considering real estate investing and more particularly wholesaling homes, you would want to buy the property and resell it as soon as possible and maybe make one or two quick deals each month. Such types of deals do not require that you have much money or credit and there are also no bosses to answer to. What it really involves is being able to locate a good deal and having someone to buy a property from you.

Actually, finding bargain buyers is not very difficult and the entire wholesaling of homes can be completed in just three weeks from start to completion of the deal. However, remember that in this form of real estate investing you need to ensure that you do not pay more than is necessary for a property and also ensure that you allow for enough scope for making a profit when selling to bargain hunters. Also, try to close the deal as soon as you can and for cash only and try to avoid buyers who want to buy through bank guarantees because that would mean delays in getting loans sanctioned and that is not good when wholesaling homes.

The bottom line is that wholesaling homes is a simple form of real estate investing and it does not require any great learning to get into this form of business. With a little luck and plenty of perseverance and hard work you can easily turn ten deals each month and thus make a tidy profit as well.

There are a many myths about doing real estate deals. Most contain a grain of truth – and a lot of misunderstanding.

Are high-profit real estate deals only for the wealthy? Is it possible to buy with no money down? Do you really have to know the “right” people? Let’s answer by looking at some of the myths of real estate.

1. The good real estate deals are reserved for the wealthy. Of course money helps, but my first deal was a $3,500 lot – which I sold for a profit two weeks after I bought it. Smaller deals, using partners, low-down deals, or just putting aside $7 per day for a couple years until you have enough money for a downpayment – these are some of the ways to start with a little and invest in real estate.

2. “Zero down” isn’t possible. I sold a rental property for $1,000 down because I trusted the buyer, and I wanted the 9% interest and higher price. A cash-advance on a credit card for the $1,000 ($30 per month payments) would have made it a “zero down” deal. “Zero down” means none of YOUR money down, and yes, it happens.

3. “No money down” is the best way. When you don’t invest some of your own money, you have higher payments. You also spend more time finding suitable properties, and pay more for them (cooperative sellers naturally want more profit for their cooperation). There are zero-down deals out there – they just aren’t always worth doing.

4. You need a lot of experience. It helps, but you get it by investing. Start with common sense, be willing to learn the numbers, and you can start where you are.

5. Good investors have a “knack” for making money. Well, sort of. But more accurately, they just took the time and risk to learn the market and to continue their education.

6. You have to know the “right” people. This is another partly true myth. It does help, so why not start the process? Talk to other investors, real estate agents, landlords, etc.

7. Great negotiating skills are necessary. Negotiating skills help with real estate deals? Of course, but learn to run the numbers and make offers based on them, and you can be the worst negotiator and still do okay.

8. You have to have insider knowledge. Insider, outsider, whatever. You do need knowledge, but understand one deal, and you are on your way. Study, and study more, but the best “insider” knowledge comes from experience.

9. Fixer-uppers are the safest way to go. Poorly planned “fix and flips” have bankrupted even experienced investors. Most poorly purchased rental properties will only eat a little money every month, and grow in value over time. Fixer uppers are for making money faster, not more safely.

10. You need to make lowball offers. Low offers may help, but the numbers have to work, and you need a plan. You can offer MORE than the market price and make money investing in real estate. Just learn how to run the numbers before you do any real estate deals.

How many ways are there to finance real estate? Who knows, but here are ten creative financing techniques to get you started.

Do all the creative financing techniques you hear about really work? Yes, actually. They probably have all worked somewhere for someone at least once. The point isn’t if they will all work for you. The point is to know what is possible, so you can find your own creative ways to invest in real estate. Here are ten methods to get you thinking.

1. Hard money lenders. You can ask around or find these online. They specialize in short-term loans at high interest. You typically use this type of financing for a “fix and flip.” You can often get the money fast, and if you make $30,000 on a project, who cares if you paid $10,000 interest in six months.

2. No-doc and low-doc loans. No (or low) documentation of your income or credit required. Again, you can find banks that do these online now. The catch is that you will only be able to borrow up to 80% of the purchase price or property value. If you have 10% in cash, you might be able to borrow the other 10% from a friend or the seller.

3. Seller-carried second mortgages. Sometimes a bank will loan you 90%, and allow the seller to take back a second mortgage from you for 5%, leaving you needing only 5% for a downpayment.

4. Land contract. Called “contract for sale” or other names as well, this just means the seller lets you make payments, and delivers the title upon payment in full. I sold a rental this way for $1,000 down, because I wanted the 9% interest, and the higher price I got this way.

5. Credit cards. If a seller will take $10,000 down on a fixer-upper that you expect to make $20,000 on, why not use credit cards? This is a true 0-down deal for you, and if you turn the project in six months, you will have paid $900 in interest on an 18% credit card. Don’t let $900 get in the way of making $20,000.

6. Retirement accounts. The laws get pretty complex in this area, but you can check with a tax attorney to see how you might borrow from your own retirement account to finance real estate investments.

7. Friends and family. Keep it all business, if you use this source, but loaning you money at 7% isn’t a gift if their money is getting 2% in the bank.

8. Note buyers. The seller needs cash. He raises the price, and sells to you for $100,000 with no money down, taking back two mortgages from you for $90,000 and $10,000. He arranged (or you did) for a note buyer to pay him $80,000 cash for the first mortgage at closing, getting him the cash he wanted. You pay two payments now, one to each note holder.

9. Get a loan on other property. Interestingly, if you take out a home equity loan for a vacation, and then forget to use it for that, you can use it for the downpayment on an investment property, without violating the rules of the bank that gives you the primary mortgage. In other words, you got in with no cash of your own.

10. Partnerships. For bigger projects, you could arrange for five investors to each put money into a partnership, with your share being the management responsibility instead of cash.

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