Ever heard of real estate auction overages? If not, you’ll be glad you read this article. Whether you’re a tax sale investor or a stay-at-home mom, the opportunity has never been greater to earn a lot of money finding and collecting real estate auction overages. But first – what are they?

For those not familiar with tax sale, if a person doesn’t pay their property taxes long enough, the property will eventually be auctioned off by the government in order to collect that back tax amount. real estate auction overages are created at tax sale when a bidder bids more for a property than the original, tax-delinquent owner owed. That overage amount is also sometimes called an overbid, or tax surplus funds.

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As a young investor you may be more focused on the rise in capital value; whereas someone in their golden years can be more focused on generating income. Property is one asset class that does both, rising in value and generating income. It is often referred to as the “IDEAL” investment.

“IDEAL” is a simple acronym that highlights just some of the key benefits of owning real estate:

1. Income – One of the key benefits of property investment over many types of investments is its inherent ability to generate passive income. When investing in property the key thing is to focus on net income. Many real estate agents will quote gross yield figures i.e. the annual rent as a percentage of the property price. Whilst this is a reasonable indicator of your potential return on investment, I prefer to focus on net yield or net income. You absolutely must have net positive cash-flow otherwise you haven’t got an investment on your hands but a burdensome liability. The challenge in property investment is to minimise the down payment (which will maximise your mortgage) whilst at the same time generating positive cash flow each month.

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REAL ESTATE Investors behavior modification leads to a massive 800% increase in rate on investment!! The majority of residential real estate investors invest with their hearts instead of looking at their investment as a business, a business that needs to provide cash flow to cover the operation, these investors are content with a return often in the 2% range or even worse in negative territory. When asked the investor will say that they are looking for capital gain and tax benefits so are comfortable with an investment that is showing a negative return.

This form of investment strategy is endemic in residential real estate investment, and investors are conditioned to believe that this is good. To maximize your profit take note of and avoid the following pitfalls this will require a major adjustment to your thinking and investment behavior.

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What Causes A Perfect Storm?

Well that’s the million dollar question, isn’t it?

What I deem a perfect storm is a set of circumstances that occur once, maybe twice in a lifetime that offers unparalleled opportunity to purchase undervalued real estate at unnaturally depressed prices. There was one similar opportunity in the late 1980s, early 1990s when the RTC (Resolution Trust Corporation – a government-run entity used to liquidate primarily foreclosed commercial assets) had one of the biggest fire-sales of commercial real estate in US history. This was a time that fortunes were made in the acquisition of overly distressed real estate assets. At that time, the market collapse was caused by 3 main factors (1) change in US tax laws affecting real estate investors, (2) Overbuilding, (3) The Savings & Loan banking scandal and fraudulent activity of mortgage lenders and appraisers.

So what’s causing the Perfect Storm Today?

(1) Massive residential property speculation in 2003-2006
(2) Too much credit available to purchase and finance real estate which was overused by lenders and uncreditworthy borrowers
(3) The current overall US market decline/recession that is spreading into a global crisis
(4) Current lack of funds for qualified borrowers
(5) Current oversupply of properties for sale

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One of the easiest and safest ways to get started in real estate investing is to do it when you are ready to sell your existing home and buy a new one. I propose that you just refinance your present home, instead of selling it, and use the money from the refinance as a down payment on your next house. Now, you own two houses and you can just turn your old house into a rental property. It’s as easy as pie.

Refinancing is easier than purchasing

Refinancing is similar to the process you encountered when you closed on your first mortgage. It requires an application, credit check, new survey and title search, as well as an appraisal and inspection fees. It’s actually much easier and quicker to refinance a property than it is to purchase one.

When I first refinanced my townhouse to get money to purchase another house, I was a little nervous. I thought, “Is this going to create too much a financial burden for me to pay two mortgages at the same time?” But, it turned out that I never had to pay two mortgages at once.

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Investment in real estate is essential to becoming wealthy. People who have already invested in the real estate know that if the investment is done with thorough research and field work with expert advice, profits will flow automatically. Property investment experts say that there are many ways to earn profits in the real estate investments.

However, a novice may have to encounter several pitfalls and challenges in the property investment field. If the investor makes up his or her mind to face challenges and risk, he or she can surely learn a lot in this field. In the long run the investor may gather enough experience and become a master in real estate investment field thereby closing several deals successfully.

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