Real Estate Foreclosures

Generating effective foreclosure leads can be rather challenging. Don’t get me wrong, there are a number of lead sources out there that will send you a large supply of leads. The only problem is you have no idea where they are at in the foreclosure process.
Some of these leads may have already corrected the problem. Others might be in a state of denial and have no intention on doing anything about it anytime soon. Still others may be interested in solving the problem. However, what they are looking to do is contrary to what you are looking to.

What do I mean by that? For instance, some foreclosure leads might be looking to save their home. However, your business model may be as such where you are only looking to work with people who are looking to get rid of their home. This is where dealing with foreclosure leads can be a challenge.

However, if you were able to generate your own foreclosure leads, it would save you a significant amount of time and money. Generating your own leads would save you time because you could focus your efforts on only the types of leads you are interested in working.

The other benefit to generating your own leads is posture. When you generate your own leads, the person is coming to you for help. With all other forms of lead generation, you are going to the person and offering your services. By having the homeowner come to you that gives you a significant advantage as oppose to you seeking out the homeowner and offering your services to them.

By utilizing the power of pay per click marketing you can generate a significant stream of qualified prospects for you to work with on a monthly basis and help to close deals. Many of these leads are also more likely to do business with you since they are approaching you first.

There are literally millions of searches that are conducted on a monthly basis for search terms related to foreclosure. While certainly not everybody that searches for foreclosure information are people in foreclosure themselves, you can be assured that a percentage of those people are.

Keep in mind those are just searches for foreclosure related terms. That doesn’t even include searches from other terms that could hint at someone in foreclosure such as “quick sale” or “buy house all cash.”

Pay per Click marketing is a strategy that you can use as a real estate investor to take advantage of these trends. With it, you can market your services to motivated sellers who are interested in finding a solution to their foreclosure challenge.

There are two ways that you can market your company using pay per click marketing. The first way is to have your ad appear as part of the search results whenever keywords and phrases are typed in a search engine related to foreclosure.  

The second way is to have your ad appear on web sites that are related to foreclosure in some way, shape or form. These web sites agree to display these ads in exchange for a share in the revenue generated by the pay per click company that you sign up with to market your services with.

The benefit to marketing for foreclosure leads using a pay per click company is that you only pay for visitors that actually come to your web site. This is unlike advertising in a newspaper where you pay just to have your ad appear.
When you set up your advertising campaign on a pay per click network, you choose how much money you are willing to pay per visitor. The service works similar to an auction process. The web sites that are willing to pay more per visitor get higher consideration for their ads than web sites that are willing to pay less per visitor.  

The other part of the consideration for ad placement is ad performance. If your ad generates more clicks for that keyword and phrase than competing ads, your ad will receive higher consideration even if other advertisers are willing to pay more..

In addition to determining how much you are going to pay per click, you also have the ability to set a daily budget. This means that no matter how much you bid, you will never be charged more than the maximum amount you are willing to pay each day.

With Pay per Click marketing, you can also elect to have your ad display only in a certain geographic location. For instance, if your primary area of investing is Las Vegas, Nevada, you can set up your campaign so that only web site visitors in Las Vegas will see your ad. This way you don’t have to worry about someone in Seattle, Washington contacting you on your web site from your ad.

Pay per Click marketing can be a rather lucrative marketing strategy for a real estate investor. It is not uncommon for an investment of a few thousand dollars to net you a deal that results in tens of thousands of dollars of profit to you and your business. The key is you must give yourself enough time and enough visitors to establish a return. Otherwise your marketing efforts will be wasted as a result of not giving yourself enough time to reap the efforts of your labor.
When you acquire a property that is in pre-foreclosure you need to have a strategy to profit from that property. It does you no good to go through all of the negotiations and work involved to acquire a property just to find that you have no way of making money on the deal.

A lease option is an excellent way for you to maximize on the overall profit that you can earn from a real estate investment. By utilizing a lease option, there are a number of benefits that you can take advantage of particularly in this market.

So what is a lease option? A lease option is an agreement between the owner of the property (in this case you) and a potential buyer of a property. With this agreement the potential buyer agrees to lease the property from you for a pre-determined time period.  

In return, you offer the potential buyer the right to be able to purchase the property from you from a specific price at anytime during the term of the lease. The price is fixed at an amount equal to and sometimes lower than the going prices for real estate in today’s market.

The potential buyer pays rent that is equal to or sometimes lower than the going rents in the area. The buyer also pays what is called an option consideration. This is a set amount determined by you the seller as a price for offering the buyer the option to purchase the property.

Should the buyer go ahead and exercise the right to purchase the property, the option consideration is used as part of the down payment for the property. However, if the buyer fails to purchase the property before the option period expires, you as the owner of the property can keep it.
So what is the benefit of a lease option? Why would you do this as oppose to just renting the property out and collecting rent every month? There are a number of benefits to lease options that in many cases can make it far superior to the typical landlord renting business model.

As the owner of a property that you offer a lease option on, you can experience and enjoy many of the benefits of being a landlord without the headaches. For example, one of the most common objections to being a landlord is “I don’t want to fix toilets.”

As a typical landlord you are responsible for all the maintenance on the property. If a toilet breaks on the property it is your responsibility to fix it. Even if you don’t personally fix the toilet yourself (which I hope you don’t do unless you are a plumber), you are still responsible for making sure the problem gets corrected.

However, as the holder of a lease option, you can add a simple clause in the lease agreement that states that the tenant is responsible for all the maintenance on the property. This way you don’t have to worry about any maintenance challenges on the property. You are literally like the bank, collecting money every month without having to deal with the challenges associated with the property.

When purchasing properties that are in pre-foreclosure, using a lease option as an exit strategy gives you a significant advantage over competing investors for the property. This is because most investors are looking to purchase the property so they can flip it or rent it out. As a result, they have less room than you on the area of price.

If you are using a lease option, you can offer more money to the seller than other investors and still make your profit on the back end when you factor in the rent you will be able to collect as well as the option consideration you will be able to collect as well.
Lease options also work as an acquisition strategy as well. Depending on what the reason is why the homeowner is in foreclosure, you can use a lease option as a strategy to get the homeowner out of foreclosure and purchase the property at a significant discount. Many times you can do this and make the owner a better offer than the investors trying to purchase the property outright.

For instance, suppose you are dealing with Bill, a property owner who is in foreclosure due to having to move to another state but not being able to sell his house. He typically has two options in this case. He can drop the price or rent the property out and become a long distance landlord.

Here’s where you come in. You agree to pay Bills outstanding payments and bring him current on the mortgage. This payment will serve as the option consideration and will be considered your down payment should you exercise the right to buy the property. 

In addition, you also agree to pay Bill’s mortgage every month. This will serve as the rent for the lease option. In return, Bill agrees to give you the option to buy the house anytime within the next 5 years at the price that the house is worth today.

This is a great deal for Bill. He gets out of foreclosure, saves his credit and also is very likely to get the price he wanted for his house. It’s a great deal for you because you can turn around, rent Bill’s house out for an amount higher than what you are paying and keep the difference in the spread for yourself.

If the house appreciates greatly over the next 5 years, you exercise the option and get the house as a discount. If the market continues to tank, you don’t exercise the option, keep the profits you made off renting the property and either renegotiate with Bill or find another property. So as you can see lease options work all around when it comes to purchasing properties that are in pre-foreclosure.