Foreclosures are often viewed by inexperienced real estate investors as a quick and easy way to make a profit of at least 50 percent. However, there are many factors to consider before plunging into this type of investment.

Not all states in the U.S. allow ’strict’ foreclosure - the borrower has a number of days to bring the debt current, failing that the title goes to the lender through the legal procedure of Foreclosure.  Whatever you do, you don’t want to get in the middle of this legal process.

Something to remember during a foreclosure procedure, is that sometimes a borrower will have the “right of redemption”. In this situation the borrower would have a set amount of time to bring up their credit and make back payments. They could also take back possession of the property and title. Beware.

If you are looking to to buy a property that is in foreclosure wait until the foreclosure process is through or at least can’t be avoided before going ahead with purchase plans. It is best to find a property in which a Notice of Default has been put into effect.

Foreclosed properties are often auctioned, but the process can by difficult. Make sure to know what you are bidding on. Make sure you have a chance to see the property and do research on the property’s legal status. Foreclosed properties are sold “as is” so buyer beware. There are no warranties or title insurance granted with foreclosed properties as there are in other property sales.

There are seasoned investors who are also professional home inspectors and can perform their own inspections. If you do not possess these qualifications, you must have a qualified professional inspect the property for major defects such as a roof that needs replacing or faulty plumbing.

It is also important that significant cracks in the foundation and potential hazards such as flooding be uncovered. These things can be repaired if you desire to fix up a home and have the time and money to do so. Ultimately, however, any major flaws in the property may warrant an appropriate discount.

Sometimes you might run across a ’short sale’ deal which is when the lender will sell the property for less than what is owed. Another term you may hear about is REO which means real estate owned.  This refers to properties owned by the lender which auctioned but not purchased. You can get some great deals on either one of these, but you must exercise extreme caution as usually these properties have a lot wrong with them.

Always take the time to investigate the property for code violations, structural problems and possible infestations. Conducting a search on the title, taxes and current financial aspects of the property will save time, effort and unforeseen expenses.