Now, the government is seeking a way to deal with these properties. According to an article in the Riverside, California Press Enterprise, the feds are “evaluating various proposals to encourage lenders or investors to convert foreclosed homes to rentals.”

Do you smell the money yet? This means deal opportunities for us real estate investors. Let’s look at some of the details.

Subsidies to Investors to Buy Foreclosures?

Fannie Mae and Freddie Mac may soon start offering subsidies to investors who buy foreclosures, said Jared Bernstein, an economist and former member of the White House finance team.

The Neighborhood Preservation Act

Another proposed option was legislation introduced in Congress last week. This bill would allow the two agencies to “rent out foreclosed houses for up to five years.” Named the Neighborhood Preservation Act, the owners or new tenants could lease the property instead of it going on the market or up for sale. This strategy had favor with the local government in this article and less favor with economists who think the government should get out of the mortgage business.

Where Does the White House Stand?

The White House seems to be more in favor of investors handling the foreclosure rentals than the federal government. According to Bernstein, “The basic idea is for Fannie and Freddie to move their foreclosed properties onto the rental market as opposed to the housing market until prices rebound.

And according to the article, homebuyers have received preference from Fannie and Freddie over investors. Right now, Freddie Mac sells about one-third of its foreclosures to investors.

What This Means for Real Estate Investors

• There may be less room for negotiation on price.
• You should start approaching distressed sellers facing foreclosure.
• You may be able to prolong major property improvements before selling.
• Rentals are in demand for at least the next two to three years, so rental income will be strong.
• Foreclosures will be increasing in the coming months as legal concerns with the process are ironed out.

Stay tuned to The Investor Insights blog this month to find out more about finding deals.

Foreclosure or REO investing is here to stay folks. Between the existing shadow inventory and the new filings, now’s the time to take advantage of this amazing buying opportunity!

To learn more about investing in REO’s visit Buying Bulk REO.

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Click HERE to download the title commitment referenced in the class.  HSBC is the owner of record and seller. DRX Capital is the wholesaler and Mr. X is the buyer that we financed.

“I really enjoyed the webinar and surprisingly, I learned some new things I didn’t know!” – Bonnie Geis

So in a foreclosure lease back what happens is the investor (The Donald) steps in and either buys the house or brings the note current and does a subject-to deal. ( Click here for Kevin’s class on Lease Options and Subject To Investing.)

Then he rents the house back to the original owner (Johnny Carson’s sidekick).

This is a great strategy BUT, like anything, comes with some baggage. The biggest being that some areas are trying to outlaw this type of investing because it has been abused.

In fact, there was a guy here in Denver named Ryan Searle that did this strategy on a big scale and got in big trouble a few years back. He would advertise a foreclosure “cure” then get the homeowner to sign over the deed to the property and sign a rental agreement.

The problems happened when the “tenant” was late on their rent and were evicted. Ryan kicked them out of the house and sold their properties keeping all of the proceeds.

Ryan said he made up all the back payments to bring the loan current and he was entitled to give them the boot when they didn’t pay.

The homeowner/renter said that he stole their house and their equity.

So, moral of the story is that this is still a good strategy if you are a foreclosure investor with some money to put into deals IF you tread very carefully with the tenant. Maybe some sort of an equity sharing agreement would cast you in a better light if you ever had to go before a jury.

Let’s just hope for Trump’s sake that McMahon pays his rent!