Preforeclosures- Discounted Second Mortgages Are Fast And Easy Profits

The best candidate for short sales, or preforeclosures, are the properties that have a fair first mortgage that is able to be paid in full and a smaller second mortgage that you can get discounted to a lower price. For example, if you have a $250,000 house, and there is a first mortgage for $175,000 and a second mortgage for $75,000, you can turn an easy profit if you know what you're doing.

First, you go in and make a deal to discount the second mortgage so that you can add your profits in there. Let's say that you get the second mortgage for $15,000 because someone is anxious to get the loan off of their hands. Then, when you close the deal, you'll be able to sell the home and turn a profit, wiping your hands of the deal much faster than you might have thought possible. Since the house is actually worth $250,000, you're banking that extra cash when you close the deal. The owner is saved from foreclosure, the bank is free of the property, and you are making cash quickly and easily just by getting the discounted rate on the second mortgage.

Any lender can fund this particular type of deal because the loan-to-value ratio is low and you can show it being paid off right away. You don't have to have a special loan type, a 'guy' who can help get funding, or even tricky double-closings and other tricks of the trade that many real estate investors talk about. You'll get a quick, easy sale, and make a good profit in no time at all, for hardly any effort on your part. There are hundreds of these available, all over the country, so you can ensure that you've got plenty to choose from in this situation.

There are two types of owners out there, so you will need to be cautious. There is the good person, the one who loves their home and paid their mortgage on time until something bad happened. These are the people that you want to work with, because it's all about helping people out. The other type of owner is one that you want to stay away from. This is a person who lied to get their mortgage, potentially defrauded everyone, and had no intentions of paying. Now they're trying to get rid of the problem and unload it on to you. The difference is obvious, so stay away from these types of homeowners when you're working with preforeclosures.