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Thousands of people are losing their homes every day to foreclosure. Unfortunately, this is the reality of our current economic crisis. With the glut of foreclosed homes entering the Real Estate market, prices are dipping to decade lows. In every crisis lays opportunity, and investors everywhere are taking advantage of the dip in prices and abundance of inventory to build their real estate portfolio.

Is buying a foreclosure morally wrong?

The answer is an emphatic No! The current crisis is simply a normal phenomena in the cyclical behavior of the real estate market. Buyer’s, in cooperation with overzealous lenders, got into unsustainable situations and the economy is reconciling this imbalance, which is nothing new. Anomalies in the real estate market have occurred in 1975, 1982, and 1992, although these exact dates are debatable as no one can really pinpoint when the real estate market makes the turn to recovery.

Everything in life is cyclical, real estate is no different. It is unfortunate that the pendulum has swung this far and people are being forced from their homes. But this is just a normal part in the “cycle of life” in real estate. Interest rates, prices, inventory, days on market (DOM) and occupancy, all oscillate in a harmonic motion; up and down. What we must do is take action that supports a recovery and does not contribute to the downward trend.

So how do we reverse the cycle?

If you don’t like the current situation, do something about it. We are no doubt in a downswing. So what will damper the fall and reverse this trend? Activity and commerce in real estate is the greatest shot in the arm for the greater economy.

In other words BUY A FORECLOSURE!

Buying a foreclosure is the best way to do your part to return our economy to a healthy state. Unfortunately, availability of credit is seeping back into the economy at a snails pace (I guess we have too many executives to give bonuses to). So we must look at other funding options for purchasing foreclosures.

Private Money

Who doesn’t have a rich uncle who is flush with cash and eager to loan you money for your impending real estate empire? Well, me for one. But, there are people out there with more time than money. Perhaps you know of a doctor, dentist or relative who just has their money sitting in a bank savings account earning a meager 2.5%. There are plenty of people out there, strangers mind you, who would be open to investing in the purchase of foreclosures if they were presented a valid plan with a sufficient system supported by factual data. If this sounds too complicated, and you would prefer to maintain your relationships, then you might want to consider Hard Money.

Hard Money

Hard money is money given by a private financier that looks more at the financial viability of the deal than at the credit of the lender. So if your credit is less than stellar, but reasonable, then hard money might be the best choice for you. They are not under the same restrictions that cover traditional lenders, so money is a bit more fast and loose. They will even give you money for the purchase and rehab of the property. Okay, so what’s the catch? Well, your cynicism will do you well in real estate; Hard Money Lenders (HML) charge anywhere from 3 to 5 points for the loan and an interest rate of 10-15%. “Extortion!,” some claim. However, if you were to receive a profit of say $10,000, without using any or little of your own money, would you be willing to give me $2,000 back? This is essentially the brunt of using HMLs. It is a bit more involved than this, but that is the quick and short of it.

Government Programs

There are several programs available to help you to purchase foreclosure properties or give you down payment assistance, although most of these mandate that it must be your primary residence. Examples of this include, “The Nehemiah Program,” and “The Genesis Program.” A great program to look into for financing the rehab of a foreclosure is the Federal Housing Administration (FHA) HUD’s 203(k) program, which can provide you funding for rehabbing a qualified property.

No excuses. Now is the time!

Regardless of your situation, I have provided you several options for getting into the foreclosure game, and the understanding that it is not morally wrong to buy a foreclosure, but will help the greater economy recover. So what are you waiting for?

A fool and their money are soon parted.

There is a right way and a wrong way to buy a foreclosure. You could charge out into the market and buy a foreclosure blindly, but there are many pitfalls to be avoided. To learn “the right way,” you can join a local real estate investor’s club and learn from other investors or take an investment course from an established brick and mortar real estate school. Although these options can take some time, you have options and you will NEVER see the opportunity in real estate that exists today.

If you understand that time is of the essence and would like the comfort of a proven system to learn how to buy foreclosure homes the right way, right away, then use the link above to get started NOW!

Regardless of what you choose, please take action now to improve your life through real estate, you would not believe the deals that are available!

Take action NOW!

I hope that this article has been helpful in educating you on the reality of why buying foreclosures is good for the greater economy. As you can see, there are several options for obtaining funding, so you really do have no excuses. Educate yourself and get in on the foreclosure feeding frenzy, but do it the right way. Please get proper education, rely on the council of licensed professionals and exercise your due diligence.

Happy Investing!