The Bankruptcy Niche
It’s already a given that foreclosure deals are a very competitive niche in the real estate business. Real estate investors try to get to properties first and with the competition, some survive and some just has to try harder next time.
This is one reason why investors are gradually turning to the bankruptcy niche.
Unlike foreclosures, bankruptcy has an atmosphere around it that could spell ‘doom’ and ‘end’ for a real estate investor. Once a property undergoes bankruptcy, you can no longer touch it. A lot of investors run away from it.
But that is not necessarily so. On the contrary, bankruptcy deals can bring you great profit!
Observe the Environment and Conditions
Looking at the homeowners’ side, there are a lot of issues to be dealt with. Lending standards have become more liberal, some properties have low or no down payment, and the average spending on housing have considerably gone up as compared to past years. Consumer expenditure has also risen, and unexpected events like divorce, death, and others may put the homeowner in a position wherein the mortgage for his home is in jeopardy.
Homeowners generally don’t want to move so suddenly. They would naturally want to stay longer in their own home. A bankruptcy claim can make this possible. It allows homeowners to stay longer in their homes as they consider their options on what to do when foreclosure starts again.
As an investor, you will see in observing these facts that there are bankruptcy claims that will be closed and foreclosure will start again. This would naturally translate itself to a profit for real estate investors.
Bankruptcy Leads
In time, the homeowners that filed for bankruptcy will realize that they will eventually lose bankruptcy protection, that the foreclosure process can come back on their doorstep again.
So what you would want to do is follow up on bankruptcy leads that you have access to. For example, if there is a foreclosure deal that you knew about that went into bankruptcy, don’t throw the file away. Follow up on the case at least once a month. Make sure that the seller knows of you. In the end, when the foreclosure comes back up, the seller might be able to remember you and contact you to take care of his or her property.
You would also want to be ahead of other investors. It would be clever to contact the sellers months before the other investors knew about it. Bankruptcy deals are usually ignored. Take this as an opportunity to contact the seller (who went through bankruptcy) and get acquainted with them.
Doing bankruptcy deals will also enable you to get the cooperation of mortgage companies. Homes under bankruptcy protection can hardly be touched by mortgage companies and this goes on for months and even years.
Make Bankruptcy a Part of Your Niche
Going entirely into the bankruptcy niche will give you some trouble, mostly because you will have to wait for the bankruptcy to be lifted up before you can work on the deal and this could take a lot of time. And it’s hard not to receive a salary for a couple of months.
Successful real estate investors don’t necessarily go entirely into the bankruptcy niche. What they do is that they only make the bankruptcy deals a part of their niche. In a way, it is like you’ll just be expanding your business to the bankruptcy niche.
