If you are looking for a way to earn extra income each month then investing in foreclosure property may be the best decision you have ever made. With the recent spate of foreclosures in recent months the real estate market has most definitely become a buyers market.

Unlike usual investing (where you make money when you sell) with a foreclosure real estate investment it is often possible to make money when you buy the property.

How do I make money when buying?

When a property is foreclosed and becomes the property of the mortgage company it simply becomes a liability for the bank or mortgage company. They want to sell these foreclosures as quickly as possible so that they can either lend the money elsewhere or pay back their own borrowing used to supply the original loan.

This desperation to sell is your opportunity to make money. Foreclosure properties often sell for below the market price as the bank wants its money back quickly. If you buy a foreclosed property you effectively make the difference between its true market value

Once you have made the purchase there are two options open to you.

# Option One: Sell for a profit

To try and bag an instant profit you can sell the property at market value and bag an instant profit from the below market value price you bought it for. This strategy is often referred to as flipping.

# Option Two: Rent

Your other option is to rent the property out. If you do your research beforehand you should know what the potential income of the property is likely to be. If this is more than the cost of finance you used to buy the property then you simply bag a small monthly profit each and every month.

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That's when taking out a short term loan can come in handy.