Foreclosure Investing For Dummies »

Ralph R. Roberts is a seasoned real estate professional and foreclosure expert who buys, rehabs, and resells homes.

Joe Kraynak is the author of more than fifty books, including Flipping Houses For Dummies.

Covers foreclosure rules and regs for all 50 states

Minimize your risks and maximize your return, while assisting homeowners

Want to buy and sell foreclosure properties? This hands-on guide covers all aspects of investing in foreclosures, from identifying potential properties and assessing value to carefully researching and inspecting properties, so you don't get stuck holding a money pit . . . or even worse, a worthless piece of paper! Discover how to deal with homeowners in preforeclosure, bid for a property, buy bank-owned properties at well below market value — and ultimately sell for maximum profit.

• Research property titles, mortgages, and deeds

• Build a strong investment team

• Obtain financing

• Network your way to success

• Avoid common pitfalls

• Invest with integrity

Introduction     1
About This Book     2
Conventions Used in This Book     2
What You're Not to Read     3
Foolish Assumptions     3
How This Book Is Organized     5
Prepping Yourself for Foreclosure Success     5
Laying the Groundwork for Maximized Profit and Minimized Risk     5
Creating Win-Win Situations in Pre-Foreclosure (Prior to Auction)     6
Finding and Buying Foreclosure and Bankruptcy Properties     6
Cashing Out Your Profit...after the Sale     6
The Part of Tens     6
Icons Used in This Book     7
Where to Go from Here     7
Prepping Yourself for Foreclosure Success     9
Wrapping Your Brain around Foreclosure Investing     11
Investigating the Foreclosure Process from Start to Finish     12
Picking Your Point of Entry     13
Scooping other investors during the pre-auction stage     14
Bidding on properties at foreclosure auctions     15
Buying properties after the sale     16
Assembling a Team of Experts and Advisors     17
Getting Your Financial Ducks in a Row     18
Doing a Little Detective Work     19
Findingforeclosures and seized properties     20
Investigating the property's title and other documentation     21
Inspecting the property with your own eyes     22
Guesstimating a property's true value     22
Investigating the situation and the homeowners     23
Setting and Sticking To Your Maximum Bid     24
Taking Possession of the Property     24
Completing the essential paperwork     25
Paying property taxes and insurance     25
Convincing the current residents to move on     26
Cashing Out: Realizing Your Profit     26
Repairing and renovating the property to maximize its value     27
Marketing and selling to get top dollar     27
Cashing out equity by refinancing     28
Profiting in other ways     28
Getting Up to Speed on the Foreclosure Process     29
Identifying the Foreclosure Process in Your Area     30
Foreclosure by trustee sale     30
Foreclosure by judicial sale     30
Exploring the Missed-Payment Notice Stage     31
Getting Serious: The Notice of Default     31
Proceeding to the Foreclosure Sale     32
Halting the Foreclosure Process     33
Reinstating the mortgage     33
Requesting and receiving a forbearance     33
Mortgage modification or repayment plan     34
Filing for bankruptcy     35
Agreeing to a "deed in lieu of foreclosure"     35
Getting one last chance during the redemption period     36
Finalizing the Foreclosure: Ushering the Previous Owners Out the Door     38
Picking Your Point of Entry in the Foreclosure Process     39
Dipping In at the Pre-Auction Stage     40
Exploring the pros and cons of pre-auction foreclosures     40
Guiding homeowners to good decisions     41
Dealing with anger and angst     42
Assessing your ability to deal with pre-auction scenarios     43
Pursuing Foreclosure Notices     44
Knowing the benefits of waiting for the foreclosure notice     44
Weighing the drawbacks of waiting for the foreclosure notice     45
Wrapping up your deal before the sale     46
Bidding for a Property at a Foreclosure Auction     46
Weighing the pros and cons of buying at auctions     48
Setting a maximum bid well in advance     49
Putting on your poker face     49
Acquiring Properties after the Auction     50
Scoping out REO properties     50
Finding and buying government properties     51
Buying properties from other investors     52
Waiting Out the Redemption Period - If Necessary     52
Laying the Groundwork for Maximized Profit and Minimized Risk     55
Building a Powerful Foreclosure Investment Team     57
Lawyering Up with a Real Estate Attorney     58
Teaming Up with a Good Moneyman - or Woman     59
Consulting a Title Company to Cover Your Back     60
Hiring a Tax-Savvy Accountant     62
Lining Up a Home Inspector     63
Contacting Contractors and Subcontractors     64
Hiring a general contractor - or not     65
Tracking down top-notch contractors and subcontractors     66
Contracting with contractors and subcontractors     66
Finding a handyman and other helpers     68
Insuring your helping hands     68
Selling Your Property for Top Dollar through a Seller's Agent     68
Recognizing the value of a seller's agent     69
Picking an agent with the right stuff     70
Assessing the Pros and Cons of Partnerships     71
Filling Your Foreclosure Tank with Financial Fuel     73
Estimating Your Cash Needs      74
Finding a Cash Stash: Knowing Your Financing Options     75
Borrowing Against the House You're Buying     77
Shaking Your Piggybank: Tapping Your Own Resources     79
Examining the pros and cons of using your own money     80
Totaling your sources of investment capital     80
Planning for contingencies     83
Financing Your Venture with Conventional Loans     83
Making yourself look good on paper     84
Gathering the paperwork and records you need     87
Comparison Shopping for Low-Cost Loans     87
Networking Your Way to Foreclosure Success     89
Grasping the Power of Networking     89
Generating leads on profitable pre-auction properties     90
Securing your financing     91
Tracking down reliable, affordable professionals     92
Selling your house for more money in less time     92
Realizing the Importance of Being Good     93
Acting with integrity - always     93
Investing in quality craftsmanship     94
Building thriving communities     94
Marketing Yourself     95
Gathering your marketing tools     95
Starting with your inner circle      97
Keeping in touch...a daily chore     97
Managing Contact Information     98
Rewarding Good Deeds and Good Leads     99
Creating Win-Win Situations in Pre-foreclosure (Prior to Auction)     101
Discovering Homeowners Facing Foreclosure     103
Networking Your Way to Promising Properties     104
Identifying your personal lead generators     104
Getting the word out on the streets     107
Scoping Out the Neighborhood for Dontwanners     108
Searching for FSBO Properties     108
Finding Foreclosure Notices     109
Tracking down local publications     110
Getting on the mailing list     110
Subscribing to commercial foreclosure information services...or not     111
Deciphering a foreclosure notice     111
Building a Property Dossier     113
Collecting Essential Information about the Property     114
Honing your title acquisition and reading skills     114
Picking details off the foreclosure notice     116
Digging up details at the register of deeds office     121
Gathering tax information at the assessor's office     126
Getting your hands on the property worksheet     126
Gathering additional information     127
Doing Your Fieldwork: Inspecting the Property     128
Doing a drive-by, walk-around inspection     128
Snapping some photos     130
Assembling Your Dossier: A Checklist     131
Contacting the Homeowners and Lenders     133
Scheduling Your Foreclosure Activities     134
Contacting the Homeowners Directly     137
Tracking down the homeowners     137
Kicking off your mail campaign     138
Getting in touch over the phone     144
Adding the Homeowners' Profile to Your Property Dossier     147
Laying Out All Available Options     147
Reinstating the loan     149
Negotiating with the lenders for a forbearance     150
Refinancing the mortgage     151
Listing the property     151
Selling short     152
Accepting your cash offer     152
Refinancing through you     152
Leasing the property after selling it     153
Selling the home and renting it back     153
Giving a deed in lieu of foreclosure     154
Filing for bankruptcy     155
Waiting (and saving) during redemption     155
Doing nothing      155
Getting Inside to Take a Look Around     156
Contacting the Lenders     156
Contacting the senior lien holder     158
Contacting the junior lien holders     158
Analyzing the Deal and Presenting Your Offer     161
Completing the Deal Analysis Worksheet     161
Calculating the homeowners' equity in the property     162
Calculating your top cash offer     165
Logging the loan status     166
Determining options based on LTV (loan-to-value)     166
Assessing the homeowners' credit health     167
Gauging the homeowners' wants     168
Determining the homeowners' gross monthly income     168
Assessing the Homeowners' Options     168
Presenting Your Offer: The Purchase Agreement     170
Closing Time     172
Finding and Buying Foreclosure and Bankruptcy Properties     175
Bidding for Properties at a Foreclosure Sale     177
Tracking Down Auction Dates, Times, and Places     178
Preparing Your Maximum Bid     179
Guesstimating the property's improved value     180
Estimating repair and renovation costs     180
Figuring in holding costs      180
Subtracting agent commissions and closing costs     181
Arriving at your maximum bid amount     182
Bidding at a Foreclosure Auction     184
Packing for an auction     185
Sitting in on a few auctions     186
Crafting a winning bidding strategy     186
Submitting sealed bids     187
Following Up...After the Auction     188
Buying Repos: Bank Foreclosures and REO Properties     193
Acknowledging the Drawbacks of REO Opportunities     194
Getting Up to Speed on the REO Process     195
Shaking the Bushes for REO Properties     196
Positioning yourself as an attractive investor     196
Hooking up with REO brokers     196
Getting connected with REO A-listers     197
Tracking the property through the REO stage     200
Working your way to the better deals     200
Following up with homeowners during redemption     201
Inspecting the Property     201
Timing Your Offer for Optimum Results     202
Acting quickly after the auction     203
Timing your move with the redemption period     203
Tuning in to the lender's fiscal calendar     204
Waiting for the broker to list the house     205
Pitching an Attractive Offer     205
Sizing up the lender's needs     205
Re-evaluating your needs     206
Drawing up an offer in writing     207
Closing on the deal     209
Finding and Buying Government Repos     211
Bargain Hunting for HUD (Housing and Urban Development) Homes     212
Weighing the pros and cons of HUD homes     213
Hooking up with a HUD-approved agent     213
Finding HUD homes online     214
Finding and Buying VA Repos     215
Profiting from Fannie Mae and Freddie Mac Properties     216
Tapping into Freddie Mac's home clearinghouse     217
Shopping for Fannie Mae properties     218
Buying FDIC properties     219
Finding and Buying Government-Seized Properties     219
Buying properties at tax sales     220
Avoiding the tax lien sales gurus     220
Buying properties from the IRS     221
Contacting your county treasurer's office     222
Taking a trip to the department of transportation     222
Finding government-seized property online     223
Banking on Bankruptcies     225
Brushing Up on Bankruptcy Laws     226
Selling assets through Chapter 7 bankruptcy     226
Restructuring debt through Chapter 13 bankruptcy     226
Knowing When to Purchase     227
Tracking Down Houses in Bankruptcy     229
Skimming publications for bankruptcy notices     229
Researching bankruptcy filings     230
Networking with the gatekeepers     230
Dealing with the Gatekeepers     232
Cooperating with bankruptcy trustees     232
Teaming up with bankruptcy attorneys     232
Getting the homeowners on your side     233
Getting the creditors on your side     233
Dealing with Bankruptcy Delays on a House You Bought     234
Sampling Some Other Foreclosure Strategies     237
Negotiating Short Sales     237
Knowing the lien holder pecking order     238
Wheeling and dealing with lien holders     240
Recognizing a short sale opportunity     241
Teaming up with the homeowners     242
Gathering payoff amounts     243
Crunching the numbers     243
Negotiating with the lien holders     245
Buying and Selling Junior Liens     249
Buying junior liens to foreclose for a quick payday     250
Buying seconds to protect the first mortgage     251
Selling a junior lien for a profit     252
Profiting from Property Tax Sales     252
Tracking down property tax sales     253
Finding golden tax sale opportunities     254
Buying tax deeds or certificates?     255
Getting redeemed out of your position     255
Profiting from the tax lien or deed     256
Cashing Out Your Profit...after the Sale     257
Assisting the Previous Homeowners Out the Door     259
Tying Up the Loose Ends after the Purchase     260
Closing on a pre-auction purchase     260
Tying up the loose ends after the auction     261
Protecting Your Investment through Redemption     262
Maintaining the property's status quo     262
Securing the property     263
Keeping hungry investors at bay     264
Planning Repairs and Renovations     266
Evicting the Residents when Time Runs Out     267
Repairing and Renovating Your Investment Property     269
Choosing a Renovation Strategy     269
Planning Repairs and Renovations     270
Calculating the return on your investment      271
Roughing out your budget and schedule     272
Giving Your Property a Quick Makeover     274
Freshen the exterior     274
Gussy up the interior     275
Tidy up the kitchen     276
Scour the bathrooms     276
Spiff up the bedrooms     276
Make the basement tolerable     277
Attend to the mechanicals     277
Investing in High-Profile Rooms: Kitchens and Baths     278
Cooking up a remodeled kitchen     278
Adding Valuable Features     280
Cashing Out: Selling or Leasing Your Property     281
Selling Through a Qualified Real Estate Agent     282
Selling faster for a higher price     282
Choosing a top-notch seller's agent     284
Staging Your House for a Successful Showing     285
Jazzing up the front entrance     285
Decluttering the joint     286
Adding a few tasteful furnishings     286
Appealing to the senses     287
Generating Interest Through Savvy Marketing     287
Negotiating Offers and Counteroffers     289
Comparing offers     289
Mastering the art of counteroffers     290
Closing the Deal      291
Becoming a Landlord     292
Checking Out Other Cash-Out Strategies     295
Refinancing to Cash Out the Equity     295
Reselling the Property to the Previous Owners...Or Their Family     296
Reselling to the previous owners     296
Financing the buyback through insurance policy proceeds and other means     299
Leasing the Property to the Foreclosed-Upon Homeowners     299
Offering a Lease-Option Agreement     300
Assigning Your Position to a Junior Lien Holder     302
The Part of Tens     305
Ten Common Beginner Blunders     307
Having Insufficient Funds on Hand     307
Overestimating a Property's Value     308
Underestimating Your Holding Costs     308
Overbidding in the Heat of Battle     309
Failing to Investigate the Title     309
Failing to Inspect the Property with Your Own Eyes     310
Bidding on a Second Mortgage or Junior Lien     310
Renovating a Property before You Own It     311
Trusting What the Homeowners Tell You     311
Getting Greedy     312
Ten Ways to Maximize Future Leads by Acting with Integrity     313
Stopping the Bleeding: Providing Basic Financial Advice     313
Assisting Homeowners in Their Job Search     314
Suggesting That the Homeowner Seek Help from Family and Friends     314
Encouraging the Homeowners to Contact Their Lenders and Soon     315
Suggesting Short Sales and Other Debt Negotiations     316
Assisting Homeowners in Assessing Their Refinance Options     316
Suggesting the Option of Selling the House before Foreclosure     317
Bringing Up the Bankruptcy Option     317
Offering a Helping Hand     318
Revealing the Option to Walk Away     319
Ten Tips for Avoiding Common Foreclosure Minefields     321
Steering Clear of Foreclosure Investment Scams     321
Researching the Title Yourself     322
Inspecting the Property with Your Own Eyes     322
Knowing What You're Bidding On     322
Setting Realistic Goals     323
Muffling Your Emotions     323
Investing with Integrity     324
Anticipating Delays     325
Foreseeing Unforeseen Expenses     325
Dealing with the Blame and Guilt     326
Foreclosure Rules and Regulations for the 50 States     327
Alabama     328
Alaska      328
Arizona     329
Arkansas     329
California     330
Colorado     330
Connecticut     330
Delaware     331
District of Columbia     331
Florida     332
Georgia     332
Hawaii     332
Idaho     333
Illinois     333
Indiana     334
Iowa     334
Kansas     334
Kentucky     335
Louisiana     335
Maine     335
Maryland     336
Massachusetts     336
Michigan     337
Minnesota     337
Mississippi     337
Missouri     338
Montana     338
Nebraska     339
Nevada     339
New Hampshire     340
New Jersey     340
New Mexico     340
New York     341
North Carolina     341
North Dakota     342
Ohio     342
Oklahoma     342
Oregon     343
Pennsylvania     343
Rhode Island      343
South Carolina     344
South Dakota     344
Tennessee     344
Texas     345
Utah     345
Vermont     346
Virginia     346
Washington     346
West Virginia     347
Wisconsin     347
Wyoming     348
Index     349