I got a call from one of my best friends today and he told me about this idea he has. Just recently, a foreclosed house sold for $4000 (yes, four thousand) in my friends area. He looked at this as an opportunity. If he could find another foreclosed house that is going really cheap, buy it (he has plenty of capital), and fix it up a little bit, could he potentially sell it in a couple of months for a profit? Hell, if he bought that house for 4 grand and turned around and sold it for 9 he would be in pretty good shape.

So what's the deal with these foreclosed houses? Are a lot of people doing this? My friend thinks he might even consider making a living out of this and he wants me to be his partner. I know it sounds crazy but it just might work...What do you guys think? Are there certain legal aspects that im overlooking?

Thanks, Dave

That blue car got me boobies once

I know a few people that have looked into this. The only problems (at least in my area) is that if you do it more than a few times, you have to get a real estate license, and there are laws here that dictate that you have to own the house for a certain amount of time before you can flip it for money.

My brother in law recently bought his mother's house to prevent a foreclosure (he has his own) and he can't legally sell it for six months from the date of his purchase.

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Well my mom does this for a living. She went and became a realtor cause thats where you loose a lot of money like Darkone said. Another idea is to fix it up, and rent it out, that way you own it for a certain amount of time and then you can sell it whenever.

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There are people that do this. the trick is finding out about the houses. Most banks dont advertise them and its a closed bid ect. Sometimes, There are a lot of different hoops you must jump through. Liscences fees ect. It can be done just do your homework and you have to be good at home repair and know how to pick the right house. if you pick a house with structural damage you are screwwed. In the bank forclosure they are not obligated to tell you of any known damage because they claim they dont know it, they just want the money owed ect. When you sell it you must legally disclose that type of info. In IL you must anyway.

Most important you need to be fiscally smart, most repairs cost 20k and up. These are not houses needing paint.

Do you know any realtors?

Terry

There's a whole TV show on this that's fun to watch:
http://home.discovery.com/tuneins/flipthathouse/flipthathouse.html

But here's a very good counter-article:
http://www.johntreed.com/flipthathousereview.html

There's few things to consider before going into this:

- This is a high risk investment dependent on market forces outside your control. You're just as likely to lose a LOT of money as you are to get rich. It all depends on how you play it.

- The housing market in the United States is currently in a decline. Interest rates have gone up considerably since last year so the market has slowed way down and prices are falling.

- Big real estate companies "fix" market prices by buying up any vacant housing and holding it until prices go back up. They'll get to the really good deals first, and there's nothing you can do about that.

- Forclosure sales aren't where the real profits are, rather the completely uninhabitable houses.

- Your profit comes largely from not charging for your own time to fix the place. You can make good money doing this, but its very hard work. How well would putting the same amount of "free labor" into the stock market or some other job pay off?

The good news:

- An awful lot of people bought houses they couldnt afford last year during the interest rate craze, on ARM loans that expire in 2-5 years. When those loans expire, they'll have to refinance, and forclosures are going to be VERY common in the next few years. That also means house prices will drop.

- Not very many people have the money, and guts to enter into such a high-risk business. Those that do, and do well, are destined to profit.

- Vegasdsmr did this at the right time, in the right place. He's now filthy fucking rich.

That blue car got me boobies once

My future father-in-law flips 2 or 3 houses a year....and does REALLY well at it. But he is a licensed realtor as well as a licensed home inspector, so he knows the condition of the structure before he bids. He is also very handy and does most of the work himself. He won't go into a project unless he thinks he can get 15k to 20k profit after he puts around 10K into it. He gets killed on capital gains taxes though...I think he paid in over 20K in taxes last year at tax time...but that was with all the other real estate he sold though the brokerage he works under too. Trust me though...his pockets aren't nervous him and mom-in-law went on 3 cruises last year and a trip to Vegas...and they are on another cruise as we speak. So there is a lot of money to be had...you just gotta know what your doing.

Good Luck

getty up

-kent-




'98 Talon...gone, but not forgotten

Any time there's a 'get rich quick' scheme, it's either a fraud, or involves a high risk, like slangin crack.

The real estate business is a highly government regulated field. For most forclosures (VA, FHA, etc), you have to put a bid in on the house and typically have to put $1000 down in earnest money. The VA or FHA/HUD take a look at all bids and accept the one that is most appealing to them. If you don't win, you get your $1000 back.

Now, for FHA/HUD forclosed homes, I believe (and I may be mistaken) you can only bid on it if you're planning on it being your primary residence. You cannot bid on it with the intention of it being an investment property. However, I believe if it's a VA forclosed property, then you can, but you're required to put more money down.

~Luke
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my cousin does it, in 3 years he made over 3.5 million dollars.
He buys them,fixes them up a little and rents them out or sells them again.


He even installs a coin operated laundry machines in them and goes around every weekend and collects over 500 in coins.
He has found that in the primarily spanish areas that those who rent the place let their neighbors come over and use the coin op machines too.

2 of the places are rented by chicago bears players.

He now owns over 150 places and is basically retired at 32 years old.
He just bought his brother a Cesna (sp?) plane for him to fly back and forth from school on the weekends.
Im jealous but he is basically a rich slum lord

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Mods are:
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What are VA and VHA/HUD foreclosures and how do they differ? I should just be searching this stuff on yahoo or google but what do you guys think? If you had a chance to do it, would you? In the long run it seems really promising but to get to that point requires a lot of hard work.

That blue car got me boobies once

Personally, I think it's a great idea for your primary residence.

I'm buying a really run down place from a friend next month for basically half the market value of neighboring houses. (HA! got to it before the big real estate companies!) It's going to be a huge step down from my current place that I rent. But home ownership can have its benefits, so I'm gonna go for it. Live in shit and work my ass off rebuilding it for a year or so, then hopefully sell for a nice profit.

Otherwise, I'll just sit around renting forever.

~Luke
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1969 Cougar - 11.91 - 380HP
2007 GSXR 750
1999 OZ - SOLD - 15.26 NA - 14.71 on 75 shot