Along with a rise in property values has been in increase in the numbers of stories of those successfully investing in foreclosed properties.  There is certainly ample opportunities as the impact of The Great Recession resulted in millions of foreclosures across the United States.foreclosure investing  Many are still awaiting a new owner.  Investing in foreclosed properties can be very lucrative, but it is best done with experienced professionals with a long record of success.

 There are critical considerations for investing in foreclosed properties, as there are with any asset.  Never let the romance of finding a foreclosed property, fixing it up, and then flipping it or renting out for huge gains cloud the calm, focused judgment needing for all investing.  Due diligence and thorough research is required.

The first consideration for considering this unique area of investing is that if the property has so much potential, why did it go into foreclosure?

That means that the previous owner could not sell it or rent it to cover the mortgage.  It also means that the note holder was unable to get rid of it without going through the expenses and hassles of a foreclosure proceeding.  There were also no investors or other parties who wanted the property before it went into foreclose.

There is also a good chance that the property will require a great deal of work.  If it has been sitting vacant, there could be a great deal of damage.  Thieves and vandals could have caused a nightmare situation just waiting for the new owner.  In addition, even if it was take care of as it went through the foreclosure process, many of the features of the property will probably have to be updated to make it as desirable as possible to rent out or sell.

Other expenses could be waiting, too.

If there are any unpaid taxes, utility bills, etc..., those will have to be paid for by the party that buys the property out of foreclosure.  This can be a very hefty tab.

Approaching foreclosures as a passive investor with a long term approach can be very lucrative, though.  

Critical here is to team up with an experienced investor with a proven track record.  Jerry Cohen, Founder and President of EquityBuild, a real estate investment firm, has been a principal in more than two thousand transactions dating back to 1984, many involving foreclosures.  Over that period, he has returned an average of 17% from transactional deals despite recessions, wars, double digit interest rates, asset bubbles bursting, even the impeachment of an American president.

Foreclosure investing can be very profitable.  Many institutional investors such as hedge funds, private equity groups and others have plowed billions into foreclosures and other properties as the real estate market in the United States continues to recover from The Great Recession.  There is still money to be made from foreclosures, but the best way is through passive investing with a long term approach.   A 17% annual return over a period of decades certainly proves that point!