In this current real estate crisis, many people are loosing their homes either because they can’t make the payments or are walking away because their house is worth less then the amount owed. It was reported by CNBC on July 24 that foreclosures now represent half of all the homes sold in the US. Although this is downright scary to a highly leveraged homeowner or speculator this is also an opportunity of a lifetime for anyone looking to buy real estate at these depressed prices.

Donald Trump is a great example of someone who was investing in real estate during a downturn in the market. Now look at him! “There are always opportunities”, he is quoted as saying. “When I first started out in Manhattan, everyone was saying what a terrible market it was”. He admits if he had listened to the nay Sayers he won’t be were he is today.

Many of the most successful real estate investors currently see this as an opportune time to buy real estate (Mr. Trump is in this list) and see pre-foreclosures as the greatest means in which to negotiate the best deals.

The great thing about buying a pre-foreclosed home is that you are dealing one-on-one with the owner and have a chance to ask questions and inspect the house. Since the bank has time to evaluate the property there is a higher probability of being granted a mortgage.

There are macro (local community, etc.) and micro aspects to take into consideration when looking for a pre-foreclosed home. Here are the some of the macro aspects:

- Do you notice an extremely unbalanced number of foreclosures available in the area? It’s preferred that your pre-foreclosure deal is the only one in the neighborhood.

- Ask around to find out what the average rate for rent is in the neighborhood and if it has changed lately. This will indicate if local housing demand is on the rise or not.

- What is the employment rate in the area? If declining then that may indicate that it’s not the right area in which to invest. Does the local economy appear to be stable?

- Contact the local government to find out about any upcoming infrastructure plans. Plans such as new building permits, train lines, shopping centers and corporations establishing a local presence, would be a good indication of community growth.

- Demographically if there is a high number of elderly people living in town who are home owners, then there could be an over supply of housing in the future, as they move in with family or nursing homes for care.

If these macro aspects all work out in your favor, and if the inspection of the house goes well, then chances are it’s a great opportunity for you to buy that pre-foreclosed home. When it comes to making a mint in real estate it’s all about timing and location.