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Why Invest in Pre-Foreclosures?

All-American Neighborhood

Pre-foreclosuresPre-foreclosure homes are properties whose owners have fallen behind on their monthly mortgage payment. In a pre-foreclosure, the lender files a notice of default informing the owner that it is pursuing legal actions to initiate foreclosure proceedings. At this stage, the lender may still be open to last-ditch attempts from borrowers to reverse the default status.

For real estate investors, the opportunities that arise from pre-foreclosures can be incredibly lucrative as homeowners will often opt to sell the property for a steep discount before foreclosure is granted and an eviction notice is delivered.

When a pre-foreclosure is listed on the market for sale, it is called a short sale. There are many advantages to investing in pre-foreclosures. For one, there is much less competition with pre-foreclosures as they are off-the-market properties that are not listed on MLS. Following are some more reasons to snag pre-foreclosures.

  1. Lower Price

These properties are typically sold at a fraction of their actual value as homeowners in this situation will offer big discounts to sell it quickly and avoid a significant dent on their credit score as short sales are not as detrimental to credit rating as a foreclosure.

  1. Big Profits

While profits are never guaranteed, you are more likely to turn a profit from short sales. That is because in many cases these properties are in reasonable condition, which allows you save money that would otherwise go toward major repairs and renovations for a distressed home.

  1. Sell Fast

Many pre-foreclosures are located in neighborhoods where buyers’ demand is high. Coupled with the fact that most of these properties are in good condition, this makes for a sound financial investment for savvy buyers. By having a solid supply of prospective buyers, real estate investors can get the highest bid and sell the property in short order.

Would you like to speak with a member of the RLG team to discuss pre-foreclosures and more investment strategies? Give us a call today! We would love to help you with the properties you currently have and multiply your investment portfolio.

About the author 

Ridge Lending Group

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