Finding foreclosures before they happen
By the time a foreclosure property reaches the internet, it may be too late. You need to start your search earlier in the foreclosure process. One of the most productive ways to find pre-foreclosures is driving around your target area looking for distressed or unkept houses.
The next step is to research the property, the first red flag is if the owner has a different address than the property, these are called absentee owners and greatly increase your chances of getting an advantageous sales agreement for the property. If the property is owner/occupied then the next step is to look at public notices about the person with your local county clerk, this will tell you if there has been any negative activity on the mortgage and also will also give you an idea of what the current mortgage situation is on the house. This will help you price the property correctly, if they owe more than you are willing to pay then you most likely need to walk away from that particular property.
Frustrated landlords as a source
Another good way to find a great deal on an investment property is to find properties that are currently For Rent, many times frustrated landlords are willing to sell off a property rather than incur the carrying costs involved in an empty house. If they have been unsuccessful in finding a renter, they may be at their wits end with the property and are willing to let it go at a discount. Remember, most real estate investors are part timers and rely on separate full time job for their income. With the recent financial crisis many of these people can no longer afford to carry or maintain the property due to a lack of extra income from their main job.
Research
One of the best tools I have seen for exploring a potential area is Landvision
(http://www.digmap.com) they offer a great solution that integrates parcel data, sales data, and an aerial map. This thing is like Google Maps on steroids and could give you the advantage over competing investors.
Being creative
With a good research tool you can really narrow your search for properties to the most likely candidates. For example, any house that was bought during the real estate boom may require a price too high to make a profit. Limiting your search to properties who’s current owner has owned it for a minimum of 4 years would avoid owners that overpaid and would require too much to pay off their mortgage(s).
In summary, you must be creative. Limiting yourself to foreclosure homes can seriously hinder your ability to find a high profit investment property. Put yourself in the shoes of owners that would be willing to sell at a discount, then figure out the tell tale signs of those type of property owners.
