I've been investing in foreclosures in New York for over 15 years. Investing in foreclosures has been very rewarding for me. Over the years, I have seen many home study courses come and go, and some aren't worth the paper or CD's they are recorded on. Although I first started out with some help from my dad via a credit line on his house, you actually don't need any of your own money to get started buying foreclosures.

When I first started buying foreclosures, foreclosures were very prevalent. I decided to start off by making some connections with local banks. Well, now, over 15 years later, like Yogi Berra said "It's deja-vu all over again", as the housing market suffers from the sub prime crisis foreclosure opportunities are abundant. Buying foreclosures is now a very profitable and easy industry in which to start your real estate business.

There are many ways to approach buying foreclosures and some are better than others. Several factors will impact the success you have such as your geographic location and your experience in the business. Properties can be successfully purchased before, during and after the court ordered foreclosure sale. In some states, there are laws that try to protect homeowners from unscrupulous investors. New York, for example, has recently enacted the "Equity theft prevention act" , which can particularly affect investors looking to purchase a property from an owner facing foreclosure before the auction sale.

Although I wouldn't recommend just diving in and buying a foreclosure with no prior experience or knowledge, here are a few tips and guidelines that have made me very successful over the years. First, get a list of defaulting homeowners, ask your local title company for help. Second, send a letter, with a handwritten address, asking if they would be interested in selling. Don't bother sending the letter unless you plan on following up with a phone call. These people are being bombarded with dozens of letters and the personal follow-up will set you apart.

When buying at an auction sale, you will need a 10% deposit, in most states, and the ability to close without requiring financing within 15 - 45 days. One of the biggest issues here is competition. If there is a lot of equity in the property there may be quite a few bidders and it only takes two to elevate the price beyond your limit. Don't catch "auction fever". Know your limit before you bid, and stick to it. Sometimes a sale will get canceled and re-scheduled quickly enough without the new date being published. With your competition unaware of the new sale date, it can be a great opportunity to catch a sale where you may be lucky enough to be the only one there!

If there are no bidders at the auction sale, the bank will take title to the property and become the new owner. The banks are taking back more and more properties these days and this could provide some really outstanding opportunities. They are motivated sellers, but you have to approach them in the right manner. You basically have two choices when buying from the banks. You can buy from brokers whereby you need to call your local Realtors Association, and ask for a referral to an "REO" broker specialist. Ask the broker to provide a current list of properties, as well as to keep you in mind for anything that may come in the future. The second way to buy from banks is to try to contact them directly. The biggest challenge is to find the right person at the bank who might be willing to sell directly without the use of a broker. The only way I've done this in the past is to take an "assignment of bid", which is actually an assignment of the referees deed from the auction sale when there were no bidders. This is something you would have to work out with the bank, not the referee. But if you are able to make this contact with the bank, it can be a goldmine!

written by Peter Lopipero