The huge surge in both real estate demand and housing prices has led to a frenzy of home buying over the last few years. This has resulted in the unlikely combination of record prices and record number of Americans who own homes. Unfortunately, interest rates have been rising for the past two years, and this has caused the sale of homes to slow somewhat. It has also led many homeowners, who bought homes relatively recently with adjustable rate mortgages, to suddenly discover that they can no longer afford to pay their monthly house payments.

This situation, while unfortunate, tends to bring out real estate investors who would like to make money on foreclosed property. Late night television advertising and extensive newspaper ads suggest that anyone can get rich by buying and selling foreclosed property. The ads also point out that with foreclosures on the rise, now is a great time to get rich.

While there are certainly plenty of people who have made money through the buying and selling of foreclosed property, doing so requires a large bankroll, a tremendous amount of time, and an equal amount of patience. The ads that tout the riches usually fail to point out the many things that can go wrong when you invest in foreclosed property.

Here are a few things that you should consider when investing in foreclosures:

Existing liens - Many people have purchased property at fire sale prices, only to discover that the property had more than one mortgage. In rare cases, the buyer may have failed to pay a home equity loan, rather than the primary mortgage. By taking on this property, the primary mortgage could become your responsibility, leaving you with no profits. Be aware that tax liens may exist as well. A thorough lien and title search is essential before buying any property.

Legal disputes with the existing owner - Laws vary from state to state, but in some states, owners can dispute foreclosures for months or even years in court. This can happen even if you have already paid for the property. This could tie up your money for a long, long time.

The owner will not leave the property - Evicting an owner from their house is more difficult, and time consuming, than you can imagine. Don't expect all owners to voluntarily leave; you may have to get both the police and your lawyer involved. There are plenty of cases of investors who have taken a year or more to evict an existing owner.

One can certainly make money buying and selling property foreclosures. Potential investors should be aware that while money can be made this way, it is not necessarily quick or easy.