I’m certainly not one to normally write about this on this blog, but something you may not know about me is that I’m very much into the real estate market. It’s one of the best ways to make lots of money and more importantly, passive income.

There have been too many banks granting mortgages to under qualified people. There have been way too many people buying their homes on adjustable-rate mortgages because the low initial rate seems attractive. The interest rate always goes up, and since most Americans live above their means already, they live paycheck-to-paycheck. They don’t even have a chance to refinance at a lower rate. When the interest rate inflates on their mortgage, they can no longer afford the payments, and are forced to foreclose. Mostly because us Americans feel it necessary to keep up with the Jones’, but at least part of it can be remedied by only taking out Fixed Rate Mortgages.

There are more foreclosures than there’s ever been. That’s a bad thing, but it brings about some opportunities for investors. Buying property at foreclosure and pre-foreclosure is a great way to get some property on the cheap, and can even help the previous owners save their credit in some cases. The only problem with buying at foreclosure is that you must have the full cash amount available to purchase the property.

Another great investment opportunity in a real estate slump like the current one in America is with tax-lien sales. A surprising amount of people have never heard of these sales. There is usually one sale per year, per county for tax liens. The jist of it is that when somebody doesn’t pay their property taxes, the county has money owed to them. After a certain period of time (it varies in different areas,) this “tax lien” against the property is considered unpaid, and held for sale at an annual tax lien sale. The county just wants their money, so they sell these liens to anybody who wants to buy them. If you purchase a tax lien from the county (again, you have to have the full cash amount,) you collect interest on the unpaid amount from the folks who owe the tax. Here in Iowa, the interest rate at which you earn is an astounding 24% annually! Talk about a great investment. If the people who owe the back-taxes don’t pay you in full (amount owed plus interest) after a certain time period (I think it’s 2 years here in Iowa,) then you own the property out-right. So you just bought a property for the back-tax amount. You still have to watch it to make sure the property is actually worth that amount, but in most cases you can earn a significant profit from these. I suggest checking into your county laws and seeing when your local tax lien sales take place.

Check out foreclosures here: Free List of Foreclosures!

Great place to sell without commissions: 0% Real Estate commissions

Find Foreclosures, HUD homes, VA homes, and other distressed properties in your area!

Note: I am in no way a financial expert or planner. In fact let’s just say I’m a financial n00bie, so always consult your local laws, your CPA, etc before following any of my advice.

Anyway, no matter how crappy the market is, there are always ways to take advantage of it. It’s like stocks; John Smith buys a stock he hears good things about when it’s at a high point. The price drops, he freaks out and sells it at a low. Although he knows the old saying “buy low, sell high,” it’s usually the other way around. People need to stop letting temporary situations get the best of them.