by Starla Ross

Created on: January 14, 2009   Last Updated: May 28, 2011

With the downturn in the housing market over the last several years, you may not think it is the right time to purchase a personal home or an investment property.  Buying low and selling high is the way to win the real estate game, and buying property when it's priced low may be a sound investment if you can afford to pay for the property and wait out the market.  The following are some tips to remember when considering the purchase of real estate in a down market:

1.  Distressed and foreclosed properties rule.

If you haven't heard, there has been a bit of a mortgage crisis over the last two years. Apparently some lenders decided to increase their risk (and profits) just a bit by offering what is called sub-prime mortgages to buyers. These sub-prime mortgages included risky mortgages like interest-only loans, no docs mortgages (where no paperwork was required), or 125% Loan-to-Value loans (mortgages where the buyers borrowed more than the appraised price of the home). The mortgages also included risky variable rate loans, where the interest rate started low and increased gradually over time. These same lenders also decided to lower their lending standards and extend loans to buyers with less than average credit.

The result? A full-blown housing crisis. This crisis has resulted in the largest percentage of home foreclosures in modern history. The crisis has also resulted in the decrease in home values by as much as one-third.

As an investor, this can be the perfect time to buy real estate at a reduced price. In fact, it's like one big garage sale for homes right now.

A large number of foreclosures have hit the real estate market. Banks are looking to sell these homes, and they're looking to sell them quickly. Sometimes called a "fire sale," banks are now selling their foreclosed homes for as little as 50 percent of the current market value.

In addition to bank foreclosures, great deals in real estate can also be found through tax lien sales, police-seized homes (Sheriff's Sales), and governmentally-insured foreclosures (like HUD, the Department of Housing and Urban Development).

Finding these available homes can be a little tricky, but information is available through local banks and realtors, as well as the local county court house where court records are stored.

2.  Mortgages are available.

If you listened to everything the media said, you would think there are no available mortgages to be found anywhere across the country. The claim that

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