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Realizing Your Profits in Foreclosure Investment

Assuming you buy a house for the perfect price, you have already profited nicely from it, but you will not get a real profit until you cash out the chips.

Renovating and repairing the property to maximize its value
The most obvious way to cash out a sizable profit is to renovate and repair the property and then put it back on the marketplace in the shortest possible time and everybody know that time is of the essence, because each day you hold a house, it costs you -in monthly expenses (if you financed the purchase), insurance, property taxes, and utilities.

The trick to renovating and repairing a property effectively is to develop a good plan well in advance and improve the house only enough to meet the going price. Transforming a $100,000 property into a $150,000 house in a neighborhood where most houses sell for around $80,000 is a big mistake. If buyers need a $150,000 house, they look into a $150,000 neighborhood.

Marketing and selling the property to get top dollar
Your goal when selling a property is to sell it immediately at a price that is pretty comparable to its market price. To achieve that goal, apply these marketing rules of thumb:

When you buy a house for less than its market price, you automatically obtain equity in the house. Renovations to bring the house up to its market price, add more value and equity.

You may cash out your equity by refinancing it higher than you paid for it to materialize your profit almost instantly. Keep in mind, however, that if you want to refinance for more than the buying price, you take on a bigger mortgage and the inflated interest rate chips away at your overall profit over time. Properly executed refinancing does, however, offer you with capital to pay for additional renovations or to fuel your next investment.

Refinancing and selling are two of the fastest and most obvious ways to gain the profit significantly from foreclosures, but other tactics are also applicable: