$171,901, would that be a better deal than if you could have bought the property from the owner before the foreclosure sale for $179,000?

The answer is that it depends. While it certainly looks like getting the property at the foreclosure sale for $7,099 less is the better deal, maybe it isnt the better deal. This is a price-versus-terms conversation.

You get a better price at the foreclosure sale. But you have to come up with almost $172,000! Buying from the seller, you didnt get as good a price-$179,000. But you only have $19,000 in the deal. Will that $7,000 lower price be worth tying up an additional $153,000?

Buying from the Lender What about buying from the lender after the foreclosure sale? Usually, the lender has the biggest financial stake in the property. After all, they originally made an 80 percent loan to the borrower to buy the property. Can you get a better deal from the lender once the property goes out of the lenders loan portfolio and into the lenders property portfolio?

Lenders property portfolios are called real estate-owned portfolios, or REOs. Real estate lenders are in the business of making real estate loans. Real estate lenders are not in the business of owning real estate.

Although lenders want to sell their REOs for as much as possible, they want to move these REO properties as quickly as possible. After all, we know what they are going to do with the money they get from selling the property. They are going to make another real estate loan!

Depending on the real estate lender, you may be able to pick up this REO property from them in the neighborhood of $155,000 to $165,000. Sounds like the best deal in the price department. What about the terms department? Ah, there is the rub. Are you going to have to put up a lot of cash and qualify for a new loan?

While real estate lenders are professional sellers, sometimes their own bureaucracy gets in the way of them making an effective deal. Our recommendation to you is to work with several lenders REO departments and see what happens. Our overall recommendation is to work out a deal with the seller in distress.Then you have more Quick Cash options available.

Reason 3: Less Competition Than Retail

As competitive as the foreclosure market may seem, it is less competitive than the retail market. There are fewer people involved in the fore-

closure market. Of the total number of real estate mortgages, a maximum of 2 percent of them will be in the foreclosure process at any one time. Once you become familiar with the material in this book, you will know more than 98 percent of the people trying to make money investing in foreclosures.

Hell, you will know more about foreclosures than 99 percent of the attorneys out there. (Maybe we should retract that endorsement about you knowing more than 99 percent of the attorneys.) The point is that we think one of the best reasons to check out the foreclosure scene is that there is very little knowledgeable competition.

Reason 4: Make Quick Cash

You can make Quick Cash in the foreclosure arena. We recommend you work with the seller in distress before the foreclosure process gets too far down the line. We call this the pre-foreclosure stage. Once you make a deal with the seller in distress, then you flip your foreclosure real estate contract.

Assign Foreclosure Contracts You may find it easier to assign foreclosure contracts than it is to assign non-foreclosure contracts. When people in general, and real estate investors in particular, hear the word foreclosure, they automatically think there might be a good deal here. When you drop the word foreclosure at a social gathering, everyone turns around to catch the conversation.

Rent Busters In the 1990s in California there was a company called Rent Busters. It offered foreclosed homes to buyers for no down payments. The concept was simple. The company would advertise for people to find foreclosure deals.

The company was paid $1,500 by a client to take the client to a foreclosure sale to buy the client a property. The client had to agree to go to 10 fore-closure sales. If, after going to 10 foreclosure sales, Rent Busters had not bought the client a property, the client got the $1,500 back.

If Rent Busters did buy a property at one of the 10 foreclosure sales,the clients $1,500 would be applied to closing costs.The company would go to the foreclosure sale and buy the property. It would pay no more than 80 percent of the retail value. Of course, since the company was buying the property at the foreclosure sale, it would pay cash.

Then Rent Busters would sell the property to the people who had brought the foreclosure to them. They would sell the property to the client for no money down. Rent Busters would carry the down payment back in a promissory note secured by a second mortgage.

The client would get a new 80 percent loan on the property. The proceeds of the loan would go to Rent Busters as the seller. This would replenish the cash that Rent Busters used to purchase the property at the foreclosure sale. Then the down payment financing would become the profit for Rent Busters collectable over the agreed time frame.

Example Lets say Rent Busters got a $200,000 property for $160,000 at the foreclosure sale and financed the $40,000 down payment for the buyer for three years at 10 percent annual interest.

Foreclosure Sale

Retail Value $200,000

Foreclosure Price $160,000

Equity for Rent Busters $ 40,000

Sale to Client

Purchase Price $200,000

New Financing $160,000

Seller Financing $ 40,000

Profit to Rent Busters

Seller Financing $40,000

10% for 3 Years $12,000

Gross Profit $52,000

Summary

When you buy foreclosures, you are buying wholesale real estate, you are buying from a wholesale seller, you have less competition than buying retail property, and you have the opportunity to make Quick Cash.

In the next chapter we will teach you how to buy foreclosures. The key is getting to the seller in distress before another investor does. Your goal is to help them out of their foreclosure situation and find a great real estate investment for yourself that you can flip for Quick Cash.