What’s up friend? Kris Krohn here. And
today we’re talking about purchasing foreclosed properties. I have had some
amazing experiences with buying foreclosed properties. And I’ve also had
a couple of bad ones as well. So today, I’m just going to let it all hang out I’m
gonna share it with you and share with you your first steps on how to get your
hands on a sweet deal. So, at the end of this video, I’m actually
going to give you my favorite tool for how I get my hands on the best for close
deals in my backyard and in other places around the country. But before I do that,
let’s just kind of get basic for a moment. What is a foreclosure? Foreclosure
is basically when someone had bought a house, they put a down payment. And they
had a 30 year or 15 year long mortgage with the bank. And so every month, they
should have been making payments to the bank. But something happened in their
life where they stopped making those payments. And banks can be ruthless and
unforgiving. Because they’ve got all this money hanging out there. And so if you go
long enough without making payments, banks will basically say, “Hey, we actually
have the legal right to foreclose on you.” And that means that we’re taking the
property back. So by the way, if you paid the property half down, you’re out of
luck. We actually get all of the benefits that might be left in this or we’re
screwed with whatever town said we’re going to pick up. And bottom line is a
foreclosure is when a property goes back to the bank, the bank is licking its
wounds like a kitty cat and is now saying, “I got to find a way to now offload
this home to somebody else.” Banks want to get their money. And they know they’re
not always going to win. They’re not always the most intelligent how they get
rid of these things. And the reason why foreclosure is such a buzzword is
because often banks will offload a house at a big discount just to get it off the
books because it’s a bad debt that is hampering and hurting the ratios on
their ability to lend and make money. So, if they got a bad deal, they want to toss
it to somebody else and that makes an opportunity for guys like you and I. One
of the first foreclosed properties I ever bought turned into like a massive
nightmare. I was probably 6 or 7 deals into my brand-new investing career.
And I had bought this house for like $297,000. That I believed was worth closer to 400 grand. And actually at
the time I thought, “I’m going to buy this, I’m going to flip it and I’m going to make $100,000. When I bought this property, it didn’t need a lot of
repair but it had actually… It wasn’t foreclosure. So when I bought it, I
thought, “Man, I’m getting a good deal on this.” But I actually listed it on the
market tried to sell it for months. And no one would buy it
400,000. So, then I lowered it to 370. No one wanted to buy it a 370. Then I
lowered it to 350. No one wanted to buy it at 350. I lowered it all the way down
to $302,000. And by the time I sold it, after
my closing costs, I actually lost money. And I asked myself, “Why did that happen?”
I developed a ruefulness. And my rule is don’t buy properties over the median.
Like in your area, there is an average level at which people buy homes. And I’m
not going to talk about the difference between average and median. Let’s just
actually go with this very basic math. Nationwide, the median right now is
around $220,000. That means that under 220,000 between 180 and 220 thousand, it represents the most
people that want to buy property. But when you go over the median, let’s call
it a $300,000 home like I bought, all of a sudden, the number of people that can
buy that is much smaller. Take it to the extreme. A 10-million dollar home. How
many people are in the market for 10 million dollar home? Like all the sudden
you can start counting on fingers. It’s not in swaths of thousands or tens of
thousands of people like there are underneath the median. So, that was a
lesson that I learned from an awesome epic fail. Fortunately, I learned my
lessons and I’ve done a lot of things right since then. One of them one of the
other foreclosures that I bought was this 97,000-dollar home.
And the bank had listed it for like 6 months. And when I actually won the bid
on this and it actually bought this house, I put about $15,000 work in it. But
then I leased it out, I had a killer cash flow because when you buy something that
far underneath the median, you’re going to get your highest percentage of cash flow.
And so it was a 3-bedroom, 1-bath. Very basic house. Kind of old. Built in the 50’s.
Down by the railroad tracks. Not even the nicest part of town. But I eventually,
sold that house for $180,000. And you know
what? I made a sick return on it. So, there is a place for foreclosures. They can be
done the right way. I’ve shared with you one of my rules. I’m going to share another
one right now. I prefer a lease option to flipping any day of the week. Putting
pressure on a property to have to be sold in a short period of time,
means that things don’t always work out the way that you want. If you’re going to do
a foreclosure, you need to have a way of actually verifying the equity that is in
it. Which means you’ve got to get a good deal on it. Just because it’s a
foreclosure, doesn’t mean you’re getting a good deal. You should talk to a realtor
and have them perform a CMA –comparable market analysis to say, “Hey, the bank is
offering it for me at this price. And we think it’s worth that price.” And you need
a standard. How much equity do you want if you’re buying a foreclosure? Because
sometimes in hot markets, homes will actually sell at or in some weird times
even above what they’re actually worth. You want to make sure that you’re
locking in the equity that you want. I utilize a tool that makes finding
properties really easy. In the olden days, I would actually contact Realtors and
title companies and get a list of properties that were foreclosed. But
today’s technology has changed the game and actually makes it super, super simple.
I use a tool called propStream. They are the world’s largest aggregator of public
available information. So, when something goes to foreclosure, they know about it.
If there’s a tax lien, they know about it. If someone skips a payment, they know
about it. If it’s listed on the market, they know about it. Basically they keep
track of and record on every single property possible that is in your market
place. And what’s really cool is that they actually provide a service where
you pay a small fee a month and you get access to everything. Literally you sign
up and within minutes, they’ll actually show you how to actually find all the
foreclosures and all the really good deals so you can get yourself a really
good deal. And the system will also show you how to find the people with money
that will buy them with you. Which means that anybody can go and actually make
deals happen regardless of whether you got good credit or bad credit lots of
money no money. It’s actually a very cool system. If you click the link below,
because I’ve sent enough people their way. PropStream now is actually doing a
five day free trial. In 5 days is enough for you to make magic happen.
It’s a tool you’re going to want to have for life if you’re serious about real
estate. Because you always want to have all the real estate at your fingertips.
So, click the link below, get a 5-day free trial. And then beyond that, there’s a
small monthly fee that’s a lot less than you can get it anywhere else online.
Because I am Who I am and I’m one of their spokespersons. Because I love
investing. I’ve done deals with PropStream. And bottom line is it works really,
really well. Boom! Thank you so much for watching today’s video. Check it out.
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