Analyzing Preforeclosure Deals

Ok, this week I’m a little late with my posts of Real Estate Investing Tips, however I’m getting back on track now.

Let’s briefly talk about analyzing pre foreclosure deals. Now, should you analyze the deal before you start your marketing campaign or do you market to everyone then analyze and evaluate the deals?

Well, it depends on where you’re at with your business. If you’re just starting out, I’d advise you to hit every pre foreclosure lead with direct mail between 4-7 times during the preforeclosure cycle. By mailing to all, you’ll get a lot of phone calls, then you can pick those that you feel you can do business with based on equity, the homeowner’s intent, liens, and the ability to discount those liens.

However, if you attempt to do all the research to find out all the liens and approximate values before you start marketing to these leads, then you’re investing a lot of time in leads that will go no where. See, many of your deals will come from homeowners that appear to have no equity at all.

Now, you could sidestep this issue by buying a quality list from someone in your area. These people hire title searches to research all the preforeclosure leads, then they sell the leads to investors on a monthly subscription basis. Now, I’m not talking about some of these websites selling out of date information, so please be careful. You should ask around at your local investment club and they will probably be able to point you in the right direction.

Ok, now that you’re getting calls, you’ve got to find out as much information as possible from the homeowner. Here’s a checklist of the information you should know before ever walking out the door:

· Name
· Number
· Address
· Approximate Value
· Foreclosure Sale Date
· Amount Owed
· How many liens? How much owed on each?
· Are they willing to sell for what they owe?
· If not willing to sell for what they owe, then how much do they need?

Now, don’t be confused into thinking that you should only talk to those with large amounts of equity because the deals with lesser amounts of equity can be discount by simply asking the lender for a “short sale”. Often times, the larger equity deals are the only ones investors market to; therefore the deals with lesser equity can be picked up without a lot of competition.

Ok, so now I’m going to go off on a little tangent here. I’ve gotta ask “why are you investing or wanting to invest in real estate?” Think about it just for a moment.

Is it the money? Is it time? Is it an escape from being the corporate slave?

Whatever you believe your reason is, it should be to buy yourself more time.

It should be to take back your life to spend with your loved ones and your family.

Just this last Friday, my Great Grandmother passed away. She was 85 years old and I admit I was truly blessed to have her as a part of my life. As you know, I normally don’t involve my personal matters in my posts, but I just wanted to reiterate to invest your time with your family while you can. All to often we get worried and caught up with business concerns and deals, losing sight of what was important to us in the beginning: having freedom. Having the freedom and the time to spend with our loved ones.

Till next time

Derek

By the way, keep checking for a new look for the REI secrets site and lots of goodies in the coming weeks!