More than 918,000 homes were repossessed in 2009, and another 1 million are expected to follow that path in 2010. A big chunk didn't sell at auction, becoming bank-owned properties. 'Hard-money' lenders put up cash at higher rates (eg. a 5% fee, plus interest rates up to 8 - 9% over market) than conventional lenders, for 60-70% of a properties' after repair value.
Author Adams is leery of short sales and preforeclosures because it can be hard to track down owners and the titles can be clouded with multiple liens. Short sales represent about 17% of the total, damaged bank-owned another 14%, move-in-ready bank-owned about 16%, while 54% are 'normal' sales. Adams suggests setting goals to get beyond fears and inertia - eg. buy/sell 2 - 3 properties/month, review the MLS daily (look for new listings, price changes), try to attend at least one investor association meeting/week to seek out deals and develop contacts. Set aside regular blocks of time to work on these activities. Start with a niche - specific area and type of property.
The first step is to find funding - get credibility with sellers via a formal proof-of-funds letter. Form a team around yourself that includes MLS access, and a handyman. Beware of properties with missing electric meters (may have been removed because of a code violation), inconsistencies between the title and MLS descriptions (again, may be due to an addition w/o a permit), major repairs. Adding contingencies to one's offers will likely get your offer put into the trash can.
