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. Subscribe and get a hold of every single
video. Because I'm either going to teach you the financial psychology of success in
the game of real estate business in life. Or I'm actually going to be showing you
very specific techniques tips and tricks that I'm using for crushing it in the
game of real estate like I have on my last 4,000 deals. So friends, subscribe.
And if you're ready to take action and want a free tool today to help you find
really good deals like foreclosures, click the link below. Sign up. It's yours.