Most books on foreclosure investing are organized chronologically based on the process:
- Finding properties
- Buying properties
- Renovating properties (in a fix and flip strategy)
- Renting properties (in a buy and hold strategy)
- Selling properties (in all flipping strategies)
But the reality is that what you do at the beginning is driven by what you want to happen at the end. Your desired outcome determines your strategy.
If you go to buy a boat, the first question the sales person will ask is what you are going to do with it. There’s no point in showing you a houseboat for hosting parties if you’re looking to enter a bass tournament next week.
So in this guide we start with the desired outcome and then cover process and strategy, which can vary based on the desired outcome. We follow with the parts of the process that are the same, regardless of desired outcome.
You must know your strategy going in before you take the first step toward finding and buying a property. Tactics that are appropriate for one strategy may be a mistake for another strategy. The less defined your end goal, the more likely you are to make costly mistakes along the way.
Each has its advantages, cash requirements, risk level and skill set. For example, if you follow a flipping strategy, you need to know how to sell. If you follow a holding strategy, you need to know how to rent and manage property.