Are foreclosures good investments?
- A foreclosure property is a home that has been repossessed by the lender because the owners failed to pay the mortgage. Thousands of homes end up in foreclosure every year. Economic conditions affect the number of foreclosurees, too. Many people lose their homes due to job loss, credit problems or unexpected expenses. It is wise to be cautious when considering a foreclosure. Many experts, in fact, advise inexperienced buyers to hire an expert to take them through the process. It is important to have the house thoroughly inspected and to be sure that any liens, undisclosed mortgages or court judgments are cleared or at least disclosed.

How do you find Government-possessed homes?
- The U.S. Department of Housing and Urban Development acquires properties from lenders who foreclose on mortgages insured by HUD. These properties are available for sale to both homeowner-occupants and investors. You can only purchase HUD-owned properties through a licensed real estae broker. HUD will pay the broker's commission up to 6 percent of the sales price. One caution. HUD homes are sold "as is," meaning limited repairs have been make but no structural or mechanical warranties are implied.

How do you find foreclosures?
- In most states, a foreclosure notice must be published in the legal notices section of a local newspaper where the property is located or in the nearest city. Also, foreclosure notices are usually posted on the property itself and somewhere in the city where the sale is to take place. When a homeowner is late on three payments, the bank willl record a notice of default against the property. When the owner fails to pay up, a trustee sale is held, and the property is sold to the highest bidder. The financial institution that has initiated foreclosure proceedings usually will set the bid price at the loan amount.

What are problems that come with buying a foreclosure?
- Buying directly at a legal foreclosure sale is risky and dangerous. It is strictly caveat emptor ("Let the buyer beware"). The process has many disadvantages. There is no financing; you need cash and lots of it. The title needs to be checked before the purchase or the buyer could buy a seriously deficient title. The property's condition is not well known and an interior inspection of the property may not be possible before the sale.

How do you get financing for a foreclosure?
- One reason there are few bidders at foreclosure sales is that it is next to impossible to get financing for such a property. You generally need to show up with cash and lots of it, or a line of credit with your bank upon which you can draw cashier's checks.

Are fixer-uppers a good investment?
- Fixer-uppers can be a very wise investment if you are willing to put in the work to fix it. It is important to have the home inspected to make sure there are not any severe problems with the home that would make it impossible to completely fix and still turn a profit. However, if that is not the case, fixer uppers can be a great investment. Most people looking for a home can not see what is not there. In other words, when looking at homes, they can not envision the potential of a home with a little work done to it. Most people simply see what is there and decide if they like it or not. The benefit to those who can improve fixer uppers is that the cost of improvements is less than the appreciation those improvements will bring to the home. Thus, when selling the home a significant profit can be made.