What You Missed August 2012 General Meeting
by Robert Davis
7 Ways to Profit With Foreclosures & The “Hidden Market”
Presented by: Tony Youngs
August 7, 2012
Tony Youngs was our speaker tonight. He has created “7 Ways to Profit With Foreclosures.” He began by giving us some history of how, in 1986, he started investing in real estate. He went to a free real estate seminar, bought the course, and found a manual about buying foreclosure houses with no credit and no money. That seemed to be what he could do.
Tony began looking at foreclosure houses listed in the newspaper. He found one he thought was unoccupied. The yard was a mess with weeds way high. The house was dark. But when he got out of his car and started looking through the windows he saw a woman inside looking back at him! He was as shocked as the person looking out was. He apologized to the woman saying he was looking to buy a house and knew this one was in foreclosure and thought it was vacant.
After some negotiation and much anxiety he got a signed contract for $65,000. The bank officer he met estimated Tony would make about $50,000 on the house. Not having any money, he turned to his dad who eventually loaned him $7,000 to cure and take over the loan, and pay the owners some move out money. He had told his dad he would double the loan money when he paid him back, so his final profit was reduced by $14,000. It was still about $27,000!
He noticed the profit on the first house he did was about the same as his gross income for the entire year as a mechanic! After doing five deals in four months, he quit being a mechanic and did real estate as his new career.
There are seven ways to profit from foreclosures, according to Tony. We can buy from the owner and cure the loan. We can do a short sale when the house is over-mortgaged. We can buy the loan from the bank if the sellers can’t agree to our terms. Of course, we can buy at the foreclosure auction. We can buy an REO from a lender. We can buy from a bankruptcy. And lastly, we can buy from the “Hidden Market.” The hidden market consists of foreclosure houses that have not been made public knowledge yet. One way to find these is to go door-to-door, asking if owners want to sell.
He suggested we go to auctions just to watch. This can give us insight as to what houses in certain areas are being bought for. We can also see who bids and who wins bids. Someone who bids and does not get a buy has a lot of cash to buy with. These may be good prospects to sell to. Also, if the house is not bought and goes back to the bank or lender, you are the first to know this. We can then approach the lender with an offer showing the bad condition of the house with pictures, mentioning the neighbors hate the ugly house they own.
Tony said there are three main fears first time investors have. They fear their offer is accepted; they fear they will get stuck with a house; they fear there is some major structural problem or lien they don’t know about. He teaches seminars on how to put these fears to rest by having the knowledge to make good deals. We thank Tony for giving us some insights into the foreclosure business.