Pre-Foreclosure Homes - How You Can Profit

After you find some pre foreclosure homes, you can negotiate with your bank for the loan.

Another way could be to write up an agreement with the owner saying that you'll pay the past due amount and that you will then continue the payments on the property till it sells. You can then share the profits.

After you learn about the owner's circumstances, you can build up a relationship and find out if their house will make a profit. It it will, get as creative as you can to make a deal happen.

The way you should deal with folks in pre-foreclosure homes is to do your best to buy them out and they leave the property. You don't want to have to deal with emotional attachment because this may lead to a very bad deal and this will most likely happen if the owners stay on.

If the owners demand on staying, lease them the property with no option to purchase it. Use caution as the previous owners could still be in very bad financial straits and this can mean you will end up having to evict them in a court battle.

When the owners aren't wanting to be just rent and they have a lot of equity in the home offer them a partnership where you both own the property. Your part of the partnership is paying up the back payments on the loan.

This partnership is going to lease the home to the previous owners for market rent. If they end up defaulting on the payments, the partnership can evict them. The previous owners will still own a partnership interest but they will no longer have possession.

If this happens, try to buy out the partnership. These types of deals do have potential of getting very messy so you should approach these types of deals with legal counsel.

Always be sure when dealing with pre-foreclosure homes that you make an exit strategy in case the previous owners all of a sudden come into money. In the contract or agreement, be sure it states that if they pay you back all the money you paid plus additional money for your trouble and time, that you will sell back the house to them.

That way there isn't any confusion and the profit is in writing. Usually this won't happen but always be prepared anything bad when doing real estate dealings.