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Should You Invest in Distressed Properties?

Buying distressed properties can be a fruitful investment, but profiting is no simple matter. Make sure you've done your research.

This story appears in the February 2007 issue of Entrepreneur. Subscribe »

Interests rates are up, the housing market is down, and foreclosures are on the rise. It's tempting to think that now might be a good time to make hay buying and selling distressed properties. Tempting, but also potentially foolhardy. There's money to be made in real estate--as at any other time--but don't expect to find low-hanging fruit that just anybody can pluck. More likely, the inexperienced or overconfident will get plucked themselves.

It's true, though, that foreclosures are relatively high at the moment, so anyone interested in real estate investing would do well to understand the process. Plenty of books and websites can teach you the basics, but beware of those that charge thousands of dollars for get-rich-quick real estate plans. (They'll get rich, while you find that a little bit of information and a lot of cheerleading is a costly combination.)

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