July 2, 2012
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Investing In Foreclosures

Foreclosure investing is extremely different than what most people envision it to be. The easy lifestyle proposed in TV infomercials or magazine ads is, for many, just a dream. These get-rich-quick commercial spots sell better than the truth; hard work and a lot of time and money invested. Let’s take a brief look at how to invest in foreclosures.


People who are big into foreclosure investing usually put a good deal of time into their research and preparation for buying a foreclosed house. Once the buying process is complete, it is time to put more work in fixing up the property and working with a realtor to get the house back on the market for sale.

Foreclosure investing is no walk in the park, but it can be extremely profitable if done correctly. The first thing to do when investing in foreclosures is to have a good estimate of time and work needed to complete the process because if you only plan to have everything tied up for one month and it ends up taking six, you have just cut your profit deep.


The next issue to deal with is money. People who have been in the foreclosure investment business for a while do have their own set of funds saved to back up their purchases if needed. It is always good to have more than you think you need in case some of the renovations go over your budget.

While you don’t have to have all of the money yourself at the time of purchase, you should not let that stop you from searching out properties. If you can’t afford the purchase on your own dime, there are certainly ways to find investors to back you up. The only thing to keep in mind with investors is that if you have a good deal, it should be fairly easy to find investors, but if no one wants to invest, chances are it is not a good deal.


Without the proper knowledge of market values, you cannot do anything with a property. If you are not sure what a house should sell for, you cannot gauge if the asking price would be worth it, or if you will be able to make enough money on the sale of the house. Without the knowledge, you also do not know how much work you should put in to make it worthwhile.

It is also important to be aware of any foreclosure laws for your state, including what states are allowed to do with people who are defaulting on their loans. It is also important to understand the federal tax liens, how to find out if property information and descriptions are correct, what to do with unpaid property taxes, and even partial interest payments.

Basically, the key is to know what you know and understand where your strengths and weaknesses are. The following is a short list of the basic ingredients you’ll need before you attempt a foreclosure investing project:

  • Understand your local market
  • Have the money to invest
  • Have investors to sell to or partner with
  • Know the laws for your state

Foreclosure investing can be extremely difficult, if not impossible, if you don’t have those four items under your belt. If you have a good understanding of at least two of the three, you can spend a little time researching the others and learn as you go.

It is also good to network with other investors in your area and learn from them. Not everyone is looking to purchase the same things, so it is okay to mingle and learn from each other. Most investors like to share their stories so you can learn from their successes, as well as their mistakes.

William Bronchick, ESQ.

Nationally-Known Attorney, Author, and Speaker

Attorney William ("Bill") Bronchick, the host of Legalwiz.com, has authored six best-selling books and is sought nationwide for his 30+ years of real estate and legal knowledge. He has been interviewed by numerous media outlets, such as CNBC, TIME Magazine, USA Today, Investor Business Daily, Forbes, and the LA Times, to name a few. William Bronchick is the co-founder and past President of the Colorado Association of Real Estate Investors and the President of the Colorado Landlords Association. Click on the "About" link above for more information on William Bronchick.

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