A foreclosure is a legal process by which a homeowner loses their home because of their inability to pay mortgage payments. The process can be very long and stressful, and it often ends with the homeowner losing against the bank.
According to industry expert Noelle Randall, foreclosed homes are an excellent opportunity for real estate investors to make money. They can sell for less than the market value, allowing investors to purchase the property at a discount.
Even at a lower price, however, properties are still expensive. Noelle Randall shares how to buy a foreclosed home despite the lack of prior funds.
Finding the property
Randall advises looking for properties in the process of foreclosure as opposed to ones already owned by a bank or a mortgage lending company. This allows for more flexible payment plans. Real estate investors can still opt for fully foreclosed properties, but since the banks are the property owners, they will have to negotiate on their terms.
There are two highly recommended ways to find the best properties. First, real estate investors can look into listing sites like Zillow and Craigslist for properties in pre-foreclosure and make the necessary arrangements. Second, according to Randall, investors can also practice “soft-selling” by marketing themselves as providers of solutions to people with property problems.
The Secret
“The secret sauce to buying properties without money or a job is a concept in real estate we call ‘subject-to’. Subject-to has been life-changing for me, and it was one of the things that have catapulted my net worth. When I found out that I could buy properties for pennies on the dollar, I was able to get more houses than I could even keep,” shares Randall.
Buying a property in this manner is purchasing a home subject-to the existing mortgage. The property buyer is taking over the mortgage payments to the bank with no official agreement with the lender.
“This helps you skip the traditional process of taking a loan which can be daunting. You won’t be required to present proof of income to the bank,” Randall continues.
Randall advises that this works best with properties in financial distress as they are more open to suggestions to help them escape financial trouble.
Getting funding
Funding is still very important when buying properties subject-to, especially if a property is behind on its mortgage. It is on the buyer to catch up with the payments. If they fail to pay for the property, the foreclosure will be under the original mortgagee’s name, which could lead to a lot of trouble down the line. Randall says that since the agreement does not involve a bank, real estate investors can have lines of credit like credit cards, business credit, borrowing, or be in contact with someone ready to take over the mortgage payments.
Real estate investors can then convert the home to a rental property that pays for itself once the investor has caught up on the payments.
About Noelle Randall
Noelle Randall is a thriving entrepreneur and a Two Comma Club award winner with over 20 years of success in real estate. She has written multiple books and maintains a YouTube channel that assists aspiring real estate investors build their wealth.People interested in a career in real estate can kickstart their success with Randall’s GROW YOUR WEALTH Investor Summit. This three-day real estate education conference includes a tour of real properties. This event is a great way to learn how to manage a real estate business. For more information, visit GrowYourWealthEvent.com.
