Great fortunes start from little amounts that are invested well.  Investing in foreclosed properties can make this happen, as history has proven.  All potential investors have to do to get started is redirect their money, according to Susan Reimer in a recent article in The Baltimore Sun.

 In her Baltimore Sun piece, "Turning two lattes and a cocktail into retirement fund" Reimer detailed how Gail MarksJarvis of The Chicago Tribune wrote about how saving just $20 a week becomes $480,000 in 40 years with 9.8 percent return.  That is basically the price of two designer coffees and one cocktail.  Investing those funds in foreclosed properties can result in even greater gains when done passively with a long term approach with a proven firm.

Investing for the long term is the smartest way to proceed in any asset class.  Study and after study reveals that those who attempt to profit from the short term buying and selling of assets almost always lose money.  The transaction costs and taxes are very high for short term deals.  The markets are too sloppy in the short term, too.  As legendary investors George Soros has said, in the short term, markets are "chaotic."  That makes it impossible to structure an investment for profit as performances cannot be evaluated to determine how well the company handles the test of time.  

In addition, the most power force in investing is just that: time.  Companies endeavor to grow over time, which should naturally increase the price.  The same happens with real estate as neighborhoods become more desirable.  Buying and selling with a short term approach denies that to investors.

Passively investing with a long term approach is the best way to profit from foreclosures.  Deals can be small at first, growing bigger as more funds are accumulated from not buying those "two lattes and a cocktail" and reinvesting the profits.  If the returns are in double digits, which have been posted in foreclosure investing, the amount invested will double in about seven years or less.  That will only happen with long term investing.

To make these returns even more appealing, the foreclosure investing can be done through a retirement account, such as an individual retirement account (IRA).  That way any rental income or capital gains from the property is not taxed.  Should the foreclosure be turned into a rental property, there is no tax on the rental income.  If the foreclosure is sold for a profit, the gains are not taxed.

Investing in foreclosures can be very lucrative.  Passively investing with a long term approach is the most advisable way to buy and sell foreclosures for a profit.  Holding the foreclosure in a retirement account will make the returns even higher as the tax burden is much lower.  

From that, the "two lattes and a cocktail" become a robust retirement account as a result of the profits from flipping properties.