Apartment buildings rarely fall into the stream of foreclosure property, but poor loan choices and the economy has left owners with vacancies and balloon payments that make them unable to carry the debt service any longer. Liberal lending practices are the primary cause of the growing number of apartment pre-foreclosures which leaves a wide-open opportunity for investors to profit. Here are seven reasons why you should make apartment pre-foreclosures your next investment.

1) The apartment pre-foreclosure market is still in its early stages and investors who get in on this trend now have the opportunity to gain from great discounts. The number of properties going into default has increased and there are some serious deals to be made in just about every major state across the U.S. What’s more is that predictions from the experts have stated that we haven’t even hit the bottom of the apartment pre-foreclosure market and there will be more opportunities that are coming.

2) There’s less competition with apartment pre-foreclosures. High dollar figures and the lack of education in commercial properties keep many investors out of this market. For those who are willing to get their feet wet and start working on their first deal, there are huge profits to be made. In general, investors working pre-foreclosure deals don’t have to deal with the stress of auctions and other investors working the same deal. For example, at the auction, most people will find that there is someone who has more money to put down and better access to credit. That can be terrorizing especially if you’re new to the game. Added to that, there’s more than enough stress to go around with foreclosure deals. With pre-foreclosure properties, investors will find the stress eliminated so they can focus on working the best deal for the benefit of both parties.

3) Motivated sellers can still be found. Sellers are already stressed because their world is falling apart. They are about to lose their home and they’ve got creditors calling them constantly. They want out and they want an option that will benefit them in the long run. While it’s true that there are horror stories where investors have found many sellers in denial, the real key to success is in the approach. There are ways to get your message to the owner without being pushy and without adding to their stress. Besides that, a seller in denial shouldn’t stop anyone from going after a good deal. After all, you just may be the person to help them out of their dilemma.

4) Apartment pre-foreclosures create large equity spreads. With the number of foreclosed properties continually bombarding the lending community, banks are more open to working out a deal if the deal presented is a good one. Huge equity spreads of 30% or more are not uncommon with foreclosure properties, but it’ll be a matter of you doing your homework, working the numbers, and finding the right pressure point that will make lenders see your deal as viable.

5) Investors retain all the benefits of tax advantages without being personally liable for the property. The best thing about working a pre-foreclosure is that you can make money without ever touching your cash or your credit. Investor’s don’t even have to use other people’s money to profit from a good deal. How? Use a land trust agreement.

6) Investors are still able to negotiate deals without substantial capital and without credit. One thing that keeps many investors out of deals is the lack of capital and the lack of credit. As many already know, one bank loan taken out in your name can mean serious financial exposure especially with apartment buildings.

There are many benefits from investing in an apartment pre-foreclosure. The cash flow is significant. The market is wide open and best of all, you never really have to take possession of the property unless you wanted to.

Tags: bank, foreclosure, HUD, investing, properties, REO

This entry was posted on Monday, March 15th, 2010 at 2:26 pm and is filed under Foreclosure Secrets. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.