Many people are either losing their homes to foreclosure or walking away because it doesn't make sense for them to keep making expensive mortgage payments, when the house is worth less then the remaining mortgage. Currently 50% of home sales across the US are foreclosed homes. Although the real estate crisis is worrisome for homeowners, it is providing opportunities for families and investors.



Donald Trump is a great example of someone who was investing in real estate during a downturn in the market. Now look at him! "There are always opportunities", he is quoted as saying. "When I first started out in Manhattan, everyone was saying what a terrible market it was". He admits if he had listened to the nay Sayers he won't be were he is today.

Many real estate experts including Donald Trump agree that now is a great time to invest in real estate and understand that pre-forecloses offer one of the best, if not the best, real estate opportunities.

The great thing about buying a pre-foreclosed home is that you are dealing one-on-one with the owner and have a chance to ask questions and inspect the house. Since the bank has time to evaluate the property there is a higher probability of being granted a mortgage.

When looking to purchase a pre-foreclosure you also need to pay closer attention to the macro aspects (I'll cover micro aspects in a later article) of the property in order to limit your risk as much as possible. Some of these property macro aspects are:

- Look around the neighborhood to see how many homes are being foreclosed. It's best that the house you're considering for purchase is the only one facing foreclosure. Obviously the more homes in forced sale, the more likely the properties will depreciate.

- Ask around to find out what the average rate for rent is in the neighborhood and if it has changed lately. This will indicate if local housing demand is on the rise or not.

- What is the local economy like at the town, local city and/or county level? Is the unemployment rate increasing or decreasing?

- Check with the local government to see of any upcoming infrastructure projects that will be taking place within 2-3 years. Projects such as new shopping malls, highways, train/subways lines, building permits for new businesses being established, new parks near the property, etc.

- Consider the age of the majority of the population within the community. If the majority of the local population is seniors that own homes, that could translate into an excess of future housing as they move into elderly care facilities.

If these macro aspects all work out in your favor, and if the inspection of the house goes well, then chances are it's a great opportunity for you to buy that pre-foreclosed home. When it comes to making a mint in real estate it's all about timing and location.