3 Ways to Make Money From Bank Foreclosure Homes

3 Ways to Make Money From Bank Foreclosure Homes

Bank foreclosure homes are considered some of the hottest properties in the real estate market today. They make the ideal real estate investments because they are affordable but have high equity. In addition, they are flexible. You can generate positive cash flow and make money from them using various real estate investing strategies.

Also known as a bank owned home or a real estate owned property (REO), a bank foreclosure home is real estate repossessed by banks after homeowners defaulted on their mortgages. It has undergone the foreclosure process but didn't receive bids at the auction.

Like what was mentioned earlier, you can use a variety of real estate investing strategies to make money from bank owned homes. For starters, you can generate huge profits from REO properties by flipping them.

Flipping is basically the process of buying and selling properties for profit. When doing a quick flip, a real estate investor buys a house at a price below market value and then sells the property at a slightly marked up price. Bank foreclosure homes are ideal properties to flip because you can purchase them for pennies on the dollar.

If you want to earn bigger profits, you can add value to your REO properties by rehabbing them. Rehabbing is simply the renovation of old and undervalued houses for profit. Although it usually takes about three months to complete a rehab project, fixing and flipping bank owned homes allow you to generate an even bigger positive cash flow. But before you rehab REO properties, you should have at least a background on doing construction and home improvement projects.

Another real estate investing strategy that you can use to make money is by wholesaling bank owned homes. Wholesaling is a method of flipping house in which an investor places a property under contract and assigns that contract to an end buyer. Wholesaling bank owned homes, however, is more complicated than placing conventional properties under contract. It is because most banks and lenders that own these properties will prohibit the buyer from assigning the contract to another person.

Wholesaling bank foreclosure homes is still possible through a simultaneous closing. A simultaneous closing usually follows the A-to-B-to-C pattern of transaction. In the A-to-B transaction, the wholesaler "buys" the property from the bank and in the B-to-C transaction, the investor sells the contract to the buyer in a separate deal. While simultaneous closings occur on separate deals, most of them take place on the same day.

If you want to learn more tips on how you can make money by investing in REO homes, simply log in to www.RehabList.com

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