Investors Scroll down for REO Realtor listings

Foreclosures have skyrocketed, there is a huge opportunity for anyone wanting to invest in defaulted properties. If you're an investor, or someone wanting to know more about investing in real estate you came to the right place. NoticeOfDefaults.com has most of the answers, all you have to do is dive in.

I am going to give you an overall look from the investor side, lender side, reo side, realtor side, insurance side, and last but not least the non profit side.

When you finish, most of your questions will be answered.

*******       Investor Side       *******

If ever you are in Cleveland you need to attend the meeting ... 
Real Estate Investors
Association of Cleveland
(formerly North Coast Real Estate Investors Association)
Weekly Meetings are held Wednesdays from 9 to 10:30AM

This is a huge topic, and if you have any lending, collections experience, or maybe just a little Elliott Ness inside of you, you'll like the hunt that comes along with finding being an investor.

There are many ways to acquire property. You can drive around putting up signs, I see them all over. You can hook up with a great realtor that specializes in HUD and REO, aka bank owned properties. You can drive around writing down board up address's and then skip trace, aka locate the homeowner. Heck you can even talk with non profit organizations and see if they will help you acquire property from the homeowners that qualify for a short sale. Or you can find a source that provides you with endless amounts of homeowners in default.  No matter what method you choose, it's fun, and there's even more I didn't mention, like sheriff sales.

As an investor you have to decide what's right for you. Do you use Hard Money, aka a friend with lots of money, aka partner, usually one that gives you a balloon mortgage and you make interest only payments for say 12 months then have to refi or pay up what you barrowed, or do you get a regular loan. If you rehab, HUD has a program you can use.

Keep in mind, all of this is for residential properties. 

Do you buy from a distressed homeowner, and if you do, do you lease it back to them? it's your decision.

Want to learn about Real Estate by playing cards?
Let me introduce to you a new game you and your kids will love, I call it ...

VirtualOpoly

*******       Lender Side       *******

I encourage everyone to look at obtaining a FHA 203K loan to purchase and rehab properties. The interest rate is slightly higher then a normal FHA loan, and you should have a little cash reserved to pay for materials and labor until you are reimbursed through a draw. This program also can provide you with 6 months of mortgage payments in the improvement escrow if you cant occupy and you have to pay rent. I don't know any hard money lenders that do this.

You need to understand fund control, and lien waivers. There are companies that will help you control the funds for your project. Especially if you are a builder.

Hard money lenders can be anyone with money. They are willing to lend it out with high points, and high interest, but might not do a credit check on you. But these people can help you get started. They really know the game too. But, if you are not good at doing say repair work, and don't have a crew, then you really don't need them. Most lenders require a plan from you that says how much rehab money you need as well as the purchase amount, then they check your work as you go, but, they give you the rehab amount over time to make sure you're doing what you say.

There are other programs as well as like I mentioned earlier from local government agencies that mirror the above and may be better on your pocket though, be sure to call places like your local HUD office. Ask them if they have funding to buy and rehab.

About foreclosures, lenders have loss mitigation departments. Any defaulting homeowner can simply call their lender for help. There are programs lenders have that homeowners have to qualify for to get out of their default. Most homeowners though for what ever reason don't call the lenders. Instead the homeowner may choose to vacate the home, which actually speeds up the foreclosure but the homeowner might not know this. Or the homeowner may call a non profit agency for help. When they call a non profit, the non profit acts as a mediator for both sides. 

The lender actually likes when a homeowner works out a default. See the lenders are what I call governed, by insurance companies, like PMI aka Private Mortgage Insurance. Don't get me wrong, a lender will still get their money if they foreclose, like if the homeowner had Private mortgage insurance and the PMI company pays the lender. But, if the lender doesn't foreclose, well they hopefully will still get the entire loan paid over time right? Right! But what you might not know is that every lender that is backed by lets say HUD, and works out a default, receives moey from HUD for not foreclosing. The reason is, it's cheaper for HUD to pay a small amount vs. an amount owed to the lender after a foreclosure. Heck the lenders even got an increase from HUD in the amount they receive for every work out solution.

Besides all this talk about who pays who what, every lender is graded by places like HUD so the lenders can't just foreclose. A homeowner can actually even bypass the lender and even a non profit organization and call up their PMI for help. The PMI company will then tell the homeowner like a non profit would, what they may actually qualify for in order to stay in the home. Then the PMI can either handle the claim or send the homeowner to a local non profit. Either way, lenders are governed.

*******       REO Side       *******

So what happens if a lender does end up foreclosing? Well, if the homeowner didn't have PMI then the bank would own the home after the sheriff sale, if no one picked it up, or if the homeowner vacated using a program like, cash for keys where the lender gives the homeowner enough to move on in their life renting in exchange for the keys to the house. 

Once a home becomes an REO the lender simply lists the home with a realtor and it's up on the market for anyone to buy through the MLS. So for investor who work with realtors,  they can still acquire a defaulted property. The only thing is, there's not much room for negotiations. You might have been better off if you contact the homeowner before the sale when the lender didn't have attorney fees, and other fee's, like board up fee's added in.

Here is a list of Realtors working with lenders and their REO properties. Contact these Realtors to get a list of REO properties they are marketing. Or visit the bank list I put together. Search for REO property directly from these banks.

*******       Realtor Side       *******

Besides going to a realtor to buy REO's, you should know that you can go to a realtor to still buy a home that is up for sale by a homeowner who is in default. You just don't know it may be in default, and you wouldn't know it unless you had a public source that pointed you to the home and once there you seen a realtor sign. In this case you have the upper hand. 

Even if a defaulting homeowner was say 5 months past due on their mortgage, they may be able to get their payments stopped by the lender by simply aggressively advertising the home for sale. To do this though requires the homeowner to contact a realtor. The reason is that the lender needs proof by way of a contract between the homeowner and the realtor. 

So here you come, as an investor, you call the realtor, they tell you it's up for sale for whatever amount, and you, being good at what you do, you know that the homeowner is in default via public records for say 35k less then what they are asking. Do you think you have leverage?

But they will never tell you. Just think, if you had a public records source, and your profession was a realtor, do you think you could sell the idea of possibly getting the defaulting homeowner approved for a stop payment advertising campaign? How many listings would you have?

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