As the number of foreclosures in your area grows, you may feel the urge to jump into real estate as part of your investment strategy. Real estate investments done right can give you higher returns than mutual funds, but they require a lot more time and trouble. Be sure you’re prepared financially and mentally before plunking down your cash.

Financially, you should:

* Be debt-free
* Have a full emergency fund of 3–6 months of expenses
* Be investing 15% into retirement accounts, such as 401(k)s and/or IRAs
* Have cash to fund your real estate deals

Mentally, you need to:

* Educate yourself about the foreclosure process
* Understand your real estate market
* Be patient about finding good deals

If you’ve been thinking about buying a foreclosure property as a smart investment or as a second home for your family, you may be on the right track. However, buying a foreclosed home is a task that should not be taken lightly. You need to know the ins and outs of foreclosures and that’s why Bargain Network has put together this must-know list of tips for buying such a property.

You will need to expect to do a lot of research before finding a suitable property. In very rare instances, you may be able to purchase the first property you look at, but in general, it will take you hours of careful research and planning to find a foreclosure property that fits your budget and your needs.

Get Pre-Qualified: Securing financing early in the process is important because it will ensure that you are qualified to purchase the property. Being pre-qualified will also give you greater bargaining power when the time comes to make an offer. Find a lender that has worked with a number of foreclosures and understands the foreclosure process in depth. Taking the time to find the right lender will save you from a lot of frustration and may also save you from losing out on a good deal.

Know the Process: Knowing about the foreclosure buying process is an important part of purchasing such a property. You can buy a foreclosed property at auction, by working directly with the seller of the property, or even by working with a real estate firm to bid on the property. Finding out the type of process being used for the homes you will be considering gives you greater bargaining power and may help you to better negotiate a price and any additional benefits such as reduced closing costs. These Bargain Network Homes links can help:

Foreclosure laws | Foreclosure Glossary | Foreclosure Timelines

Figure out what you want: Putting your early efforts into researching properties, you’ll need to find reliable resources for information. You can start your search by using Bargain Homes’ exclusive Foreclosure Database. Take advantage of Bargain’s resources, and spend time looking for listings and make note of those that match your price range and your requirements for a property. If you’re looking for a 4 bedroom home, don’t settle for one that has three bedrooms; keep searching until you find what you’re looking for so that you can be satisfied with your purchase.

Research the Area: When you’ve put together a list of properties you may be interested in, your research is not finished. You will need to start looking into the benefits of the surrounding neighborhood, the availability of public and private schools, the population of the area, average property values, the rate of property value growth in the area, and the availability of career and recreational opportunities. There are many sources of information available on Bargain Homes that can help locate specific information. If you are working with a realtor, they can often provide additional property brochures and comparative market analysis reports that list information about the sale of comparative homes in the neighborhood. Finding out this information before visiting each property can save you a lot of time and eliminate neighborhoods that would not accommodate your lifestyle.

View the Properties: Once you’ve compiled a list of potential purchases, you may be able to schedule an appointment to view the property or attend an open house. This is the time to find out how accurate the listings were. Carefully examine every nook and cranny of the home, checking for structural damage, rodents, termites, plumbing and heating issues, and other common problems. Check to make sure that all features outlined in each listing are truly available with the purchase. Ask as many questions as you can think of before making a decision. Buying property is one of the biggest and most important decisions that can be made, and you need to have all the information available to you when you are considering all the factors involved in the purchase.ONLINE PHARMACY

How much should you pay? Once you’ve viewed the properties, you need to consider the price, the condition of the property, and the surrounding neighborhood. Don’t make your purchasing decision based on price alone. A very low price can mean that the property was abandoned for many years or was not kept in good condition by the previous owner. It may need extensive renovations that can be expensive and time-consuming. Buying a more expensive home that is in good condition rather than a bargain-basement home that has extensive damage will save you money in the long run. You will also need to find out if there are any liens on the property or if the property has been affected by a bankruptcy. This information is not something you want to find out after you have already progressed through most of the buying process and can be a legal hassle to resolve.

Bid on the Property? Once you’ve finished all of your research and decided on a property, it will be time to negotiate with the seller or make a bid on the property. Depending on the process being used, you will be working with a number of professionals, which may include bankers, attorneys, real estate agents, and other representatives of the home. During this negotiation process, you may be able to get yourself a deal on the total cost of purchasing the home. If you’re working with a bank, you may want to look into taking over the existing mortgage. Some banks will waive closing costs or reduce the interest rate on the mortgage if someone assumes it at closing.

This seems to be the right place to post my question!
Re: US foreclosed properties/homes

My buddy went to a seminar in Toronto last month - and it is coming around again in July.

He's very set on real estate as investments - which I don't normally subscribe to - they are illiquid, there are many transaction costs, etc etc.

So - the pitch from Pinnacle Property Solutions (based in the US) is that they have a pool of bank-foreclosed homes bought at auction - they will resell them to you for different process, based on condition ... and for Canadians, there is an add-on package that deals with administration, title issues, THEN advertising to find renters ... and eventual sale.

Given the huge gap between the 'wholesale' price (nominal $21K American buy-in) and the represented average selling prices ($50K+) ... this seems like it might be a good opportunity.

It's not often we see a house price so low, eh?

Would love to get back some of the lost paper-money in my portfolio of late.

BUT - concerns about property management, title actually clearing ...???
Just askin'
Worth a visit to North York?

A link to the outfit bringing them to Canada;
www.normandhaas.com/pinnacle

Their main site (a bit opaque) www.pps-reo.com

Monty....for your forum regarding foreclosure properties. In Ontario we deal with "Power of Sale". The bank's lawyers contact us, usually because of performance( sending deals to this lender). We then provide a comparative market analysis for the lender, and the attorneys advise regarding price. Not all are bargains in the beginning. The lender must prove to the previous owner that the property was marketed by a real estate broker achieving the highest possible price. Sometimes similiar to comparables in better condition are sold at a better price with some recourse if there are hidden items not disclosed or issues are rectified from a home inspection. Power of sales are sold " as is" The lender holds no responsibility.

That is why we hire professionals to protect the client. Jeepman2

Monty not at this time. I am going into year 4. The last 3 have been great in terms of sales income clearing my debts. I am expecting values in my area to really level and possibly decline. Reason #2, I do not have the expertise to rehab a bad property. Monty you can lose huge dollars in unforseen issues ie: mold, UUFI Insulation, leaky basements, really bad tenants, and many more problems.

This is why I am studying commercial investing including leasing, financial returns, malls, medical bldgs, downtown vacant land, senior housing and more. There is a real need for realtors with these investment skills.

I sold a brand newly built 6 plex fully rented with a 10% capitalization rate.
My clients, 2 brothers have top quality tenants, 1 block to a great mall and medical centre, and they are happy guys.

Monty get professional advice. I have the best in mortgage, legal and construction assistance. Thank you for your question. For now I am getting more education, then I'll invest. Jeepman2

Thanks jeepman2...
I'm posting these questions as a discussion starter..

Sometimes you need to have the questions to start the discussion..

I have been looking at real estate and studying it in my area for the last few months.

I'm taking my time doing research and due diligence before I get into real estate..

jeepman have you done real estate investing?

Monty. Hire a professional realtor in your area.Someone with a CCIM designation. A CCIM certified realtor can answer all investment questions from 1) cash flows 2) capital gains 3) power of sale investments etc......

Check with your R/E boards for real estate licensing courses. In Ontario the association is OREA. The website is orea.com
I thought I had the knowledge until I became licensed and studying now to become a CCIM. A bad R/E deal prevents an investor to purchase more than 1 property. Contact me amd I'll provide more info to anyone, anytime.....Jeepman2 Lives real estate 24hrs.

Some more good questions about real estate investing for Canadians.

• What percent of real estate agents have at least one assistant?
  
• What is the capital gains tax on investment real estate property?
  
• How exactly do "Hard Money" loans work in real estate bussiness?
  
• What type or math need for real estate?
  
• What do I need to know when purchasing a foreclosure real estate property?
  
• How much should I expect to pay to become a licensed real estate agent?
  
• What are the steps required for property locator n real estate get started?
  
• What is the best online course to obtain a real estate license?
  
  
• In the real estate market, is an economy in recession more favorable to buyers or sellers?
  
• What is the approximate cost (%) of design for a real estate development?
  
• Does anyone know some of the legal things i have to do if i start up a business that buys and sells real estate?
  
• What is the future like for a career in real estate?
  
• What is the best type of investment plan?