Foreclosed homes are often targets for breaking and entering, squatters, and other such illegal activity. As such, you need to take precaution when viewing these properties.

Announce Yourself

Announcing yourself before you enter is apart of property viewing 101; There could be someone illegally living in the property, or there may simply be another person there inspecting the property. I always give a quick knock on the door right before I open up the property. Further, saying your name aloud and your reason for being at the property as you enter is also a great safety measure. Because on the flip side of this issue, if you were inside a foreclosed property and suddenly you heard movement or voices within the house and didn’t know another potential buyer had entered, you’d be expecting something much worse; It’s simply common courtesty to prevent an escalated misunderstanding.

Never touch exposed wiring

The majority of the time foreclosed homes have their electricity shut off, either by the power box or by the actual electricity provider. However you should never assume the electricity is off simply because the lights, air conditioning, fans, etc. are off. In some cases the electricity may be on, but because of prior visits from other interested parties/inspectors, only some parts of the house may have the electricity shut off. For this reason, if you ever see exposed wiring in a foreclosed home, always treat the wires like they are hot, and never ever touch them.

Carry Protection

A non lethal form of protection can go a long way in keeping you safe from potential attackers and lawsuits. I don’t recommend you carry anything that can inflict permanent or significant damage. A tazer or mace are more than sufficient to stop an average man, and are less sever than a knife or a firearm. Plus a firearm requires a license to carry.

Chances are you won’t run into any trouble in a foreclosed property or need to utilize these safety tips when you are there, but it’s only to your benefit to take no chances. So please be safe, view these properties with precaution.

Pros of Real Estate Investing

A Tangible Asset
Real estate is a tangible form of investing; You invest in properties, and you can physically see and feel your investment. This is somewhat of a luxury, as you can rest easy knowing at the end of the day that your investment isn’t going anywhere (unless it’s a mobile home of course). With stock market investing, you only have a computer screen showing you what you own… unless you request to have hard copies of your shares.

True Value No Matter The Economic Health
When it comes down to it, no matter if you overpaid for a property or got a great price, you still own a piece of property. Real estate will always have value, even in the worst of times because real estate is one of our basic needs. People need homes to live in, businesses need places to conduct business, and real estate will always be in demand for that reason. This doesn’t mean you can’t lose money in real estate, but it does mean that if you hold a piece of real estate free and clear, you own an asset with true value.

Efficient Markets Don’t Truly Exist
With real estate investing you don’t really have efficient markets, or markets with true transparency like you do with the stock market. What I mean by this is that you can’t just easily come up with a value for a property; You can do your due diligence and reach an estimated fair value price, but it just doesn’t compare to the kind of research and information available on the stock market. This is a good thing though, as inefficient markets present great opportunities for bargain priced deals. Sometimes people just don’t know what is the right price to sell at, other times people are desperate and price their property extremely low. If you are familiar with your local real estate market you can easily identify these deals and invest in them.

Cons of Real Estate Investing

Not Liquid At All
Unlike the stock market, real estate investing is not a quick buy and sell atmosphere. Even if you bought a property and had a buyer lined up for it the next day, closing the deal would still take about a month on average. This can be a problem if you need liquid cash immediately, and it’s a definite disadvantage compared to stock market investing.

Steep Learning Curve
In real estate you have to be knowledgeable in many different ways, and you have to have experience (or the ability to learn quickly) to overcome many little oversights or difficulties that will often come up. Knowledge is required in every sub category of real estate: mortgages, titles, insurance, construction, negotiations, market familiarity, appreciation potential, income potential, etc.. you have to be somewhat of a jack of all trades if you want to invest properly or it could cost you everything.

Significant Liabilities
If you own shares of a publicly traded company, you are not held responsible for the company’s actions and thus cannot be held liable for any illegal activities. However with real estate investing, you are pretty much a target for the sue-happy type. You’ll need insurance to protect yourself from the shady tenants who try and reach in your pockets, or when someone accidentally hurts themselves on your property that was entirely their own fault.

The famous investing philosophy to be fearful when others are greedy, and greedy when others are fearful comes from the king of wise investors, Warren Buffet. This philosophy is timelessly profound, can be applied to any form of investing, be it real estate, the stock market, etc., and is simple to understand.

When others are greedy, it commonly means a recession is soon to follow, or at the very least that a bubble exists. You should be putting into consideration all of the potential risks when you do investments in a time of greed. However when others are fearful, it usually means we are in a deep recession or soon near it. This is the time to be greedy, when prices are dropping like flies because people lose perception of value in the midst of all the chaos. During times of fearfulness is when all the bargains can be found, and where the seeds are planted.

Our economy will recover and collapse time and time again, that is for certain. What isn’t for certain is whether you will keep a clear head through it all and stay the wise investor.