by Greg Winkler

Created on: January 14, 2009   Last Updated: August 30, 2011

Are you wondering how to make money in a recession? What kind of business profits from a down economy? You may be surprised to learn that buying and selling foreclosed homes is the ideal business in tough economic times. There are a several reasons for this: Foreclosures represent the best home values available; There are a glut of foreclosed properties due to all the recent job losses; and there is a similar glut of painters, carpenters, and other tradesmen looking for work. Your next question is the most important one: How can I sell a home for more money than I paid for it in a recession. We'll explore the answer to that question in this article.

To make money at dealing with foreclosed properties, you must pay attention to the details of how properties become foreclosures, and how you acquire and dispose of them profitably. Mastering the details determines how successful you will be, and how much money you will make. Fortunately, none of them are particularly daunting, and with some care and diligence you will be a professional foreclosure flipper in no time.

Let's start with some foreclosure basics:

KNOW THE FORECLOSURE BASICS

Foreclosures are the sad result of someone losing their home because they cannot afford it. That is sad and unfortunate, but the foreclosure process can result in a happier ending for everyone. The homeowner may recover some equity, avoids bankruptcy, and removes a heavy debt load. The bank recovers most or all of their loan value. You get the opportunity to purchase a discounted property and resell it for a profit. All in all, then, foreclosure is a positive outcome in most regards.

• How Does Foreclosure Work?

Foreclosure is not a quick process. A bank does not usually begin foreclosure on a homeowner until he has missed about 3-4 months of payments, and has been unresponsive or unrealistic in proposing to the bank how he will catch up. The bank will then place a foreclosure notice in the local newspaper, the property will be auctioned to the highest bidder, and the property is yours. Except when it is not. Some states require "redemption periods," which is a specified period of time in which a foreclosed homeowner may repurchase the home by paying all loan costs, interest, and penalties. In a few states, this period may last for as much as a year.

• How long must properties be advertised?

The length of time foreclosed properties must be advertised varies among the states, but generally properties must be advertises

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