by Ronald Manalastas

Created on: January 13, 2009   Last Updated: February 26, 2009

You can make money buying and selling foreclosed homes. The home foreclosure tragedy has a refreshing flipside to play. With several millions of people losing their homes, there is suddenly enormous opportunity in the property rental business.

How can you do it? Let me share the real-life success experience of a friend and encourage you to follow the processes he went through so that you can move on correctly in the foreclosure business. The steps to make money are as follows:

1. Know exactly your financial purpose.

With the problems that now cripple the real estate industry, never miss the exercise of knowing exactly what you want to get from investing in the "buy and sell" of foreclosed homes. Having a clear financial purpose is very important because it will determine your buying decision, as well as your selling judgment once you have the foreclosed property.

First, how much are you prepared and willing to invest in buying a foreclosed home? This should be an amount that you can realistically bear, a value that you can comfortably part with or pay for. Be conservative and prudent when trying to configure how much you should invest. You are in control of your money and you are the best judge as to how you will spend it. Be contented with what you have than what you can have. Do not aim for the moon when you can only fly just above the treetops.

What is your central idea? It is to buy a cheap property, make improvements on it, and then sell it fast at a reasonable premium? Do you intend to own an additional home, rent it out, and then sell it when property values go up? Do you want to buy a modest property to live in, and rent out your present upscale home at an amount higher than your combined home loan amortization? Or, do you wish to acquire a foreclosed property, fix it, and then lease it out among bed spacers or multi-family tenants so that you can have monthly additional cash flow?

You have to make a clear decision on which need really motivates you. In whatever situation you are in, it is a must that the income you will get from commercializing the foreclosed property is greater than your investment in acquiring it. And, you can be more specific by establishing your "return on investment" target. Is it 15%, 20%, 25%, or a much higher earnings rate? Your answer should satisfy your most compelling need and desire.

2. Be sure you have the resources to start a "buy and sell" venture.

Unless you are just a broker who lets sellers and buyers meet and gets commission

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