“Why Small Investors looking for a Home Business Opportunity
are NOT making Any Money with
Foreclosures and Short Sales”
Eighteen months ago there were plenty of foreclosures for small investors looking for a Home Business Opportunity but now Deep Pocket Investors are able to get the big discounts because they buy 100’s of foreclosed homes in bulk packages from Lenders…why should lenders deal with small investors when in the long run they can actually save money by unloading large numbers of homes in a single deal? The deep discounts, for small Investors, are becoming a thing of the past.
Investing in FORECLOSURES and SHORT SALES is DIFFICULT to IMPOSSIBLE unless you are CASH RICH. How can you compete when large numbers of small investors show up to foreclosure auctions, many bidding on the same properties, driving up the purchase prices? I personally sat in on an auction where virtually all the 100 plus homes sold for 90%-95% of the asking price!
What about “pre-foreclosures” you say? Well, there are ways to “funny finance” these properties (contract for deed, subject to, owner finance) but if you think that the entire process of getting, rehabbing, selling/flipping these homes can be done “without using your own money” you’re in for a big surprise. First, how do you find the homes “for free”? The internet, mass mailings, email blasts and cold calling are viable ways. But all of these require cash, they can’t be done for free. Trying to market just one home at a time isn’t lucrative and more of a hassle than it’s worth. In order to get just 1-2 houses, you must market to several hundred home owners. It’s a numbers game. The more houses you market the better your chances are (?).
· The Internet isn’t free, if you work from home and depending on where you live and monthly costs range from $50 to $90.
· Mass mailings (average costs with postage, printing of postcards or letters and envelopes, a minimum of $2.50 to $5.00 per piece. Send out just 100 costs $250.00 to $500.00. What really adds to the problem is most of them are thrown away as “junk mail” and not even opened!
· Email blasts, with everyone scared of opening unfamiliar emails, most of these are deleted.
· “Cold Calling”, this takes a very special person and requires hours of your time. You really need to have a love of rejection.
No out of pocket, my A&%s!
You will quickly find you aren’t the only one searching for these homes. In talking with a pre-foreclosure homeowner, who responded to my mailings, I was told she had received “numerous” other mailings, phone calls and even people knocking on her door, at all times of the day…unannounced! If you could contact these people without any competition, like it wa when the concept was first discovered, and you had all the cash you need to do the above 4 things, you might just make money. But now thousands of people/invetors are vying for these homes.
Not to mention it is a breach of contract for the home owner to walk away from the home and let someone else make the mortgage payments. If the lender finds out about it, and they do, they have every legal right to immediately call the total mortgage due and even seize the property (see “Garn-St. Germain Depository Institutions Act, of 1982). This would be a disaster if you had taken the property “subject to” and placed an owner financed family in the home, with an extended contract.
The “gurus/experts” say, “just get the property under contract and at the same time find a family to purchase the home”. Right, in this market, who are they kidding? That could take you, on the average, 6-9 months, remember banks aren’t loaning the money we gave them. Do you have a few thousand a month to pay the mortgage, all the upkeep, taxes, utilities, etc waiting for a buyer?
I can speak from personal experience.Dale F Baird Jr DC
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