Sound too good to be true? Give me a few minutes and I’ll make you a believer.

Today, I am going to give you two ways to bring in extra income (or build yourself a small fortune), starting this week, in spite of the economy.

Strategy 1. It’s a Numbers Game

One of my students, Matt, impressed me so much that I began partnering with him on investments. And we evolved a system that works like a Swiss watch.

You start by looking at lower-priced houses, $150K and under. You are going to buy them for about half of what the fair market value is, and you are NOT going to do anything nasty to achieve this. The catch is, you need to make about 25 offers in order to get one deal. You want to focus on houses that are already listed below fair market value – and the longer they have been on the market, the better.

Your formula for this: Fair Market Value x 60% = Your Offer

In other words, for a house that has a fair market value of $100K, you would plug in $100,000 x 60% = $60,000. That would be your maximum offer, give or take. If you have good credit, banks will very likely lend you the money because you’ll be getting the property for so much less than market value.

Matt does this and, in most cases, he rents the property out for cash flow. You could also flip it to another investor. Buy it for 40 percent off; sell it for a 20 percent profit. If you find a property that is already discounted 20 percent, you offer less – say, 30 percent less than the asking price. Matt offered 10 percent less on a bank-owned house that was already at 50 percent and it was accepted. He had a buyer lined up before he closed on it, and presold the house for a $20K profit.

By the way, only 10-20 percent of the properties we buy are foreclosures. The rest are owned by people who just want to get out immediately.

If you don’t have the money or credit to use this strategy, find private money. There are plenty of people out there who would love to earn more than their 401(k) or IRA is delivering now, and would be delighted to invest in properties where you’ve done all the legwork.

Remember, it’s a numbers game. You’ll need to make 25 offers (on average) to get one deal.

Strategy 2. Control With Contracts

This strategy allows you to put cash in your pocket in 5-20 days. Ideally, you’ll have a few people lined up to help you when you need them: a realtor to help you find deals, a broker to help you get your buyers approved for loans, and a lawyer to draft/okay your notes/contracts.

You also have to create a list of people who buy investment properties. To find them, simply run ads in your local Pennysaver, put out flyers advertising “Houses 50% off,” get phone numbers from “I Buy Houses” signs, check out REI (Real Estate Investing) Clubs, etc.

Then you build a list of potential tenant-buyers – 10-15 people who would be interested in a lease-option deal (renting with the option to buy). Again, use Pennysaver ads and flyers. In addition, advertise on CraigsList, tell your realtor that you will do some rent-to-owns, and post signs at apartment complexes, bookstores, convenience stores, etc.

And then it’s time to find the properties.

You’re looking for motivated sellers. People who are behind on their payments are perfect. Find them with the same advertising techniques mentioned above, using phrases like “stop foreclosure” and “debt takeover.” Get expired listings from your realtor, and look for “For Sale by Owner” signs.

You’re also looking for houses that don’t need much in the way of repairs. You’ll wrap the cost of necessary repairs into the down payment you ask for from your investor or tenant-buyer, so get an idea of what you might have to pay for painting, carpeting, roofing, door and window replacement, etc.

Now you put it all together.

You get the houses under contract as cheaply as you can. (Check comparable prices on homes in the neighborhood on sites like zillow.com and realtor.com and in local real estate listings.) You tell the sellers that it will take you anywhere from 5 days to 60 days to pay off their notes because you are going to wholesale or lease-option the property. And you write the contracts as “and or assigns” so you can turn them over to someone else.

As soon as you get a property under contract, call the people on your investor list. Tell them all about the house. Mark up the price a little (or as much as you can). But make sure they can still make plenty of money on resale or they will move on to another deal.

If you cannot flip the property to an investor, go to your tenant-buyer list. Pick the one with the most money for a down payment or the best credit. (Your mortgage broker will help you.) Offer to put that person in the house with a 12-month lease-option. Let as much money as you can stand go toward the down payment for three months or so. The mortgage company likes that – and you should have their mortgage done in 3-6 months.

Basically, none of it is your money. You use the tenant-buyer’s money to get the house.

Go and Invest!

I always look for positive solutions to problems. That is why, instead of giving in to the gloom and doom of this down economy, I look at the current real estate market as an opportunity to make money while helping others.

Let’s say property values in your area are down 20 percent. Put out 25 offers at around 60 percent of market value. (If a property is listed at $200,000, maybe you offer $120,000.) In my experience, you can expect one of those offers to be accepted. Now you have a house with a fair market value of $200,000 that you can purchase for $120,000 – and you can easily find someone who will want to purchase it for $145,000, because that is still $55,000 under value.

You have just made $25,000 without risking any of your own money… and you have helped someone else find a great deal.

[Ed. Note: Dean Graziosi has been an active real estate investor for over 20 years. His first two books, Totally Fulfilled and Be a Real Estate Millionaire, were New York Times bestsellers. And his newest book, Profit From Real Estate Right Now, is already out-selling his previous book - which was the fastest-selling real estate book in America.

Dean offers proven programs that teach people to succeed as investors, starting with little or no money, credit, or experience. His free online investors' website and free training calls reach thousands of people every week. For more information, please visit www.deangraziosi.com.]

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1. The “irrational” markets are over.

The wild appreciation in real estate values over the 10-year period that peaked in 2006 is history. There’s no argument from anyone on that point. Combine that with the failure of huge banks and home lenders, and you have a very tight money market restricting any short-term price growth.

2. Prices are flat or down just about everywhere.

This may sound ominous, but it’s far from negative. Never before have homes in great neighborhoods been available at such depressed prices. There are foreclosure bargains in every price range. And suggested government programs may subsidize the liquidation of these foreclosure properties at even lower prices. It’s a true buyer’s market.

3. Those who lost their homes must rent.

Rental demand is increasing, and should do so for years. Those who lost their homes to foreclosure must rebuild their credit. And before they’ll be able to purchase again, lenders will require them to make larger down payments and meet stricter requirements. So they’ll be renting for a long time to come.

Remember, a large percentage of those foreclosures happened because people made poor choices when they got their mortgages – not because of financial misfortune. Many foreclosure victims are still employed and can pay market rental rates, and they are likely going to rent something similar to their previous home.

4. Government initiatives are depressing interest rates and stimulating home sales.

Though requirements have tightened, those with good credit and a down payment can get mortgage rates lower than at any time in the last 20 years. And since the government has a strong stake in reviving the housing market, more help is on the way.

Even if you live and invest in an area where prices have merely stalled or grown by a tiny margin, the opportunity is the same. When the hardest-hit areas (the Southeast, the West Coast, and the Southwest) are just turning around, these less volatile areas will already be showing price appreciation.

From a purely economic supply/demand viewpoint, this is an amazing window in time for real estate investors. We have more demand for rentals, lower prices to purchase properties, lower rates to finance our purchases, and a government that’s using every avenue it can to stimulate the housing industry.

To take advantage of this unprecedented opportunity, you need to be poised to jump as soon as a good investment arises.

Investing in real estate, whether you’re new to the business or an old pro, doesn’t require a whole lot of skills. But it does require knowledge. The more knowledge you have, the better able you’ll be to spot the best deals.

One of the sayings I live by is “Knowledge plus action equals results.” To be a successful real estate investor, you need to be constantly adding to your knowledge base – especially when it comes to:

• Current national real estate sales and price trends
• Local trends that influence where people want to live
• Local employment, industrial, and job creation activities
• Neighborhood dynamics (whether the population is growing or declining)
• Resources for everything from loans to renovation

Knowledge comes from many sources and directions. Make sure you get your information from someone who is active in the current market – not someone stuck in the pre-bubble days.

Of course, as Robert Ringer and Michael Masterson have said many times, knowledge doesn’t do you a lick of good unless you get off your butt and do something with it. This means taking action – turning over every rock, investigating every real estate investment that sounds good, and moving on the best ones.

[Ed. Note: Dean Graziosi is a full-time investor who began his investing career over 20 years ago - during the last major recession! He's made millions of dollars with his real estate investments, and currently has more than 30 deals in the works. Discover his bestselling blueprint for making $10,000 in 30 days right here.

For more cutting-edge advice on how you can make money in real estate, check out ETR's upcoming Wealth Building Summit. Get all the details now.]

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Another obvious argument for investing where you live is that it gives you the ability to watch and manage your properties – a task that is neither easy nor inexpensive when they are a distance away. And that’s the argument most seasoned investors focus on.

Still, I know from experience that investing in far-flung areas can be profitable.

For example, I live in Arizona. But not long ago, I invested in properties in both Iowa and Illinois – more than a thousand miles away. At the time, job growth was strong and rental income was going through the roof. I have a student named Matt who lives in the Iowa/Illinois quad city area, and I partnered with him on a few deals.

A local quad city bank noticed that we were buying houses and came to us with a commercial property valued at $2.5 million. The bank had it in foreclosure, and wanted to get it off their books. They made us an offer that included a 5.5 percent interest rate for five years. One-third of the property was already rented to tenants, and the bank agreed to rent back the remaining rental space for us. After our back-and-forth counters, the sales price came down to $1,596,000. Right now, we get a cash flow of 20K a month, with the bank renting out the space. Once we get tenants in at market rents, our cash flow will more than quadruple.

Another deal Matt and I partnered on was a bank-owned foreclosure valued at $400K. We made an offer of $162K, they countered, and in the end we got it for $164K. The current market value is more than twice our purchase price. We can rent it or list it. Either way, we make a super profit.

If you know and trust someone who understands a “long-distance” area you’re considering investing in, he may be able to help you gain – and maintain – the very thorough knowledge you need to make smart decisions. That would include an understanding of these five market factors:

Long-Distance Investing Factor #1. How does your market relate to the big picture?

Location is always important. Even in an economic downturn, certain areas of the country can be extremely attractive because of such things as job availability. Watch national real estate price indexes like the Case-Shiller Index and the OFHEO (Office of Federal Housing Enterprise Oversight) Home Price Index. When these indexes are improving or looking bleak, what are the factors causing the rise or slide? Are they factors that can also influence your micro-market, be it a neighborhood or a city?

Long-Distance Investing Factor #2. What makes your market special… or not?

You also need to ferret out local trends or strengths that make your market area different, unique, or robust. Is industry or commerce moving in? What will keep area values strong or appreciating?

Neighborhoods with a strong job base fare well even in a bad economy. Baby boomers needing healthcare keep communities that surround medical centers hopping. Companies that are going “green” are also attractive to live near. Is the local government providing tax incentives to lure business? There is a trend for people to want more clean, open space in their environment. Is your market area moving in that direction?

Be thorough and objective in your analysis, as it can make the difference between success and failure.

Long-Distance Investing Factor #3. Is local government helping or hurting your chances?

We touched on this in Investing Factor #2 – but, other than attracting new businesses and planning for more parks and green space, there are ways in which government, or even subdivisions, can influence market direction. In particular, there is a tendency for people to resist change, to maintain what they have even if it means throwing up obstacles to prevent growth in certain residential areas. This can sometimes be good for prices, sometimes bad. It’s hard to predict which.

Here are some of the requirements imposed by governments and associations that added to the cost of building and, thus, helped prices rise during the real estate boom:

• An increase in minimum home sizes
• An increase in lot sizes
• Forcing builders to reserve green space
• Requiring wider streets, more street lights, etc.

Ultimately, requirements like these usually slow or impede growth. On the flip side, you don’t want to see rampant growth allowed, with poor zoning and little attention to quality of life, traffic, and safety issues.

Long-Distance Investing Factor #4: What do the numbers say?

Real estate investment requires a great deal of diligence in analyzing purchase price versus value, rental outlook, and other financial factors. What are the rents maxing out at for comparable properties? What are these other properties experiencing in the way of vacancy rates or non-payment of rents? What are existing capitalization rates? (The cap rate is the ratio between the net operating income produced by the property and its original price or its current market value – and it is an indirect measure of how fast an investment will pay for itself.)

Are there condition factors that might be important? Are many of the multi-family properties in the area in poor condition or lacking amenities wanted by today’s renters? If so, that isn’t necessarily bad – especially if you’re going to end up with a property that is in much better condition than others in the neighborhood.

Don’t do the numbers only on the property you are considering. Have a firm grip on how your potential investment’s numbers fit into the local market.

Long-Distance Investing Factor #5: How firmly are you planted?

We started this discussion with the importance of investing where you live. And when you have a long-distance investment, you are, in a sense, “living” there. So, how does the area appeal to you? Add a sheet to your diligence file. Make it a pro and con assessment of the area as it relates to your own quality of life. If the other four market factors look good for a particular investment, knowing that you wouldn’t mind being there for some time to come could seal the deal.

[Ed Note: If anyone knows about the pitfalls of real estate, Dean Graziosi does. He's a real estate expert, teacher, and author who's been investing since age 18! His book Be a Real Estate Millionaire is a New York Times, Wall Street Journal, Amazon.com, and USA Today best-seller. For an ETR-reader-only special on this book, go here.

Once you've got a solid foundation with Dean's guidelines for beginners, you'll be ready to start learning the techniques that will make you rich. Of course, real estate isn't the only investment that can make you millions. Get some of the biggest secrets to churning out cash from 12 of the world's experts in building wealth. Learn how you could be making $1.2 million or more in 2009.]

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Right now, I’m working on more than 25 deals. This allows me to share winning strategies from the past as well as cutting-edge techniques that work in today’s down market.

Yes, investing in real estate has some risk associated with it. Some people lose tons of money in the real estate game. But for every tale of woe and failure, you can find a tale of victory. You see, real estate isn’t rocket science. And many of the problems that precede a failure can be prevented.

In my experience, there are three major pitfalls that new investors encounter:

• Buying in the wrong location
• Buying at the wrong time
• Buying without examining the facts

Did you notice that none of those things are complex or technical? They all seem to be just “common sense.” Let’s look at each one and expose the iceberg under the surface.

Real Estate Pitfall #1: Buying in the Wrong Location

You’ve heard it many times… real estate is all about location, location, location. And while there’s no doubt that this is true, it’s a bit of an oversimplification.

Some of the ways location influences real estate investment values include:

• Population demographics related to people moving in and out of the area
• Quality of living factors (and these can change over time)
• Over-exuberance on the part of buyers and builders because of the area’s past history
• Major lifestyle trends that may not yet be apparent

These influences can apply to large areas of a state… or to local subdivisions or neighborhoods. The wise investor will focus on a local neighborhood he’s familiar with, but not to the exclusion of the entire city or county.

Location is more than just a pretty street with views. Here are some questions you should ask yourself before you invest in a property:

• Is there job growth, stagnation, or shrinkage here? (If an area has a sudden increase in jobs, more people will flood in, driving up real estate prices and apartment rentals. If an area suddenly loses jobs, more people will leave, depressing real estate prices and lowering rental demand. Both situations create different but profitable opportunities.)

• Are industry and commercial ventures moving in or out?

• Has there been a recent trend for government to dedicate large tracts of land for parks or green space? (This reduces land inventory for building, makes life more pleasant in the area, and is, thus, a predictor of more people wanting to live there.)

• Has the trend for more parks and green space driven builders to over-construct new homes… beyond the current demand for them?

• Are trends unrelated to the immediate area going to impact prices or the demand to live there? (For example, U.S. home prices fell 4.8 percent in the second quarter of 2008 compared with a year ago, a new record low. This could indicate that a home that was appraised for $200,000 a year ago and is on the market for $190,000 still may not be a good deal.)

• Are high gas prices going to cut into the demand for more rural living… or increase the demand for homes in urban areas?

The changes in demographics and/or trends that make a location more or less desirable happen gradually – and a careful investor makes every effort to uncover them.

Real Estate Pitfall #2: Buying at the Wrong Time

Look not only at what is happening in an area, but also how long it’s been happening. The announcement of major new land allocations to green space, for example, can be a good thing – but buying several years after the fact could be a purchase into a market about to change.

One of my students bought a nice three-bedroom brick home in a good rental area. Based on his research and knowledge of the area, he purchased the home with 100 percent financing and rented it for a $100 per month positive net cash flow (after paying mortgage, taxes, and insurance).

He bought this home because he could see that the path of commercial development was headed right through the area where it is located. And he plans on holding onto it until commercial development drives up the property’s value and he can apply for rezoning to office/commercial and either sell or lease it.

He knows that he will need to hold onto this property for four to five years to maximize his profits, but since he bought it with 100 percent financing and the place actually makes him money every month, he is in no rush.

Real Estate Pitfall #3: Buying Without Examining the Facts

Any successful investment starts with a good buy. Making a good buy in real estate requires a great deal of valuation analysis.

The following story about two of my friends illustrates the dangers of relying too heavily on your emotions and not enough on objective information that could be staring you in the face.

“John” and “Joan” fell in love with a beautiful Victorian home the moment they stepped inside. Although the house was in bad shape, it had leaded-glass windows, carved woodwork, built-in hutches, and hardwood floors. They bought it, cleaned it up, and made it sparkle.

“We loved the house even though it was in a questionable neighborhood. As a result, we violated the number one principle of real estate: Location, location, location. To make a long story short, the beautiful house we loved could be rented only to less than desirable tenants, because the type of tenants we’d hoped to attract didn’t want to live in that neighborhood.”

Although John and Joan eventually sold the house for a small profit, they would have been better off had they examined the facts and made a decision to buy a different home in a much better neighborhood.

Keep in mind that though real estate is local, major national and international events and trends can help the worst of markets… and damage the very best. So be sure to analyze a real estate investment’s national and local factors. Still, one very positive local factor can outweigh multiple national factors.

Start by researching location and market timing, then research them again. Get the picture for the area before you narrow your search to specific properties. Once you’ve decided that timing and location are right, then look at individual homes.

It is now number-crunching time. There simply is no substitute for a thorough property evaluation using all of the mathematical valuation tools available.

• What is your gross potential income – the rents you can count on to be paid regularly and on time?
• What is your breakeven ratio calculation (fixed costs/gross profits) for that magic turn to positive cash flow?
• What are all your potential expenses and risks?
• What is the property’s investment potential? (Use the cap rate calculator at www.deangraziosi.com for this.)

Your lender may keep you focused, because they will likely want to see numbers that assure them of a performing loan asset. But in the end, doing the math well is your responsibility… and to your benefit.

Sure, it takes work to find the right properties. But it’s not complicated. You don’t need any special education or skills. It’s all about gathering information and making decisions based on hard factual data, proven calculations, and a little bit of luck.

Hey, if a naive kid like me – who came from no money, had no mentors, and never went to college – can do it… you can too! By acquiring the right knowledge and taking the right actions, your first deal could be just weeks away.

[Ed Note: If anyone knows about the pitfalls of real estate, Dean Graziosi does. He’s a real estate expert, teacher, and author who’s been investing since age 18! His book Be a Real Estate Millionaire is a New York Times, Wall Street Journal, Amazon.com, and USA Today best-seller. For an ETR-reader-only special on this book, go here.

Once you’ve got a solid foundation with Dean’s guidelines for beginners, you’ll be ready to start learning the techniques that will make you rich. Of course, real estate isn’t the only investment that can make you millions. Get some of the biggest secrets to churning out cash from 12 of the world’s experts in building wealth at ETR’s 2008 Info-Marketing Bootcamp. Learn how you could be making $1.2 million or more in 2009.

Over the past 20 years, I’ve made plenty of mistakes. By learning from my mistakes, you can sidestep some of the pitfalls and start making money much faster. And you do it by memorizing three simple words:

• Goals
• Abilities
• Resources

If every new real estate investor would take these three words, analyze them, and build a plan for each, there would be few – if any – nightmare investments.

New investors can be fearful and very careful… or confident and decisive. But it really doesn’t matter. It comes down to goals, abilities, and resources for all of them. These three words can fill the voids, fix the shortcomings, and enhance the strengths of practically any real estate deal.

Here’s how to put them to work for you…

Key to Investing Success #1: Goals

Before you enter into any real estate deal, ask yourself what your goals are. You don’t need to become an expert in the lingo, investment practices, mathematics, evaluation, negotiation, or any other specifics of the process at this point. Simply decide what you want to accomplish. What do you want to see as a result of your investments? Sure, you want to make a lot of money. But do you want to make that money as a very active and hands-on property manager? Would you prefer the kind of deals that will require very little of your time? Do you want to do your real estate investing on the side, while you continue working at your primary career?

Just jumping in without knowing what they’re after has taken down many an investor. The eager newbie takes on more than he should, and ends up having to hire out management, repair, and maintenance. He finds that his positive cash flow investment has evaporated, and he has to search for a buyer to get himself out of the predicament.

It’s critical to the success of your investment that you sit down and honestly examine why you want to invest in real estate… what you’re willing to do to succeed… and what your expectations are for income and future ROI (return on investment). This will help you determine where to look for investment property… what type of property to buy (single-family homes, multi-unit buildings with hired management, etc.)… and how much time and money you can expect to put into the project.

Once you’ve completed this self-analysis, you will have a plan.

Key to Investing Success #2: Abilities

Once you’ve set your goals, ask yourself another critical question: “What are my abilities?” This is not meant to discourage you from implementing your plan. It is merely a transition step between establishing your goals and the actual act of investing. You can’t do a good job of determining what kind of help you’ll need until you know what you can do for yourself.

Here is a checklist of the skills that are necessary:

• Gathering and analyzing market trends and information
• Locating properties, even if they aren’t currently “on the market”
• Evaluating properties for condition and possible repair or renovation
• Determining the costs of repair or renovation
• Valuation of properties with all the necessary ROI and math tools
• Negotiating with sellers or their agents
• Overseeing repairs and renovations
• Property management, maintenance, rent collection, eviction, etc.

Again, honest self-assessment is critical. Don’t puff yourself up, but don’t sell yourself short either. Be conservative in evaluating your abilities – keeping in mind that you will be able to hire or partner with other people to take care of anything you can’t (or don’t want to) do.

If you’ve never lifted a hammer to build so much as a dog house, you would want to prepare for the necessity and expense of selecting, hiring, and dealing with contractors. If you buckle under at the first hint of opposition, you would want to consider working with a real estate professional or trusted associate for the negotiation phase. If you hate math and finances, you would want to find a partner who is good at it or plan to get help from a professional.

And that brings us to the last key to investing success:

Key to Investing Success #3: Resources

You have a goal and a realistic assessment of your abilities. You know what you want to accomplish. And you know what you can and cannot do on your own. Now all you need to do is fill in the gaps. It’s all about resources – where to find them and how to use them.

When it comes to market knowledge, area demographics, and local and national market trends, it used to mean spending hours in the library. But, as with most research these days, now it’s all about the Internet. It’s still worth checking out the library, but the latest and most valuable information will be on the Web. Learn to use the search engines, bookmark useful sites, and build a research database of information.

Two websites for researching your market are homefair.com and reia.org. And I have a free online forum where investors communicate and share information at deangraziosi.com. (I highly recommend getting involved in it.)

As Michael Masterson has said many times in ETR, having a mentor is one of the best ways to speed up your success in any field. As a beginning real estate investor, you can learn the ropes and start making money much faster by enlisting the help of experts. Build your support team early on. Ideally, your team should consist of the following:

• attorney
• accountant
• real estate professional
• general handyman
• major-renovation contractor
• title company
• banker or lender

You’ll find that there are reliable and trustworthy people in all of the above areas who will be willing and ready to help you in your investment business. Start with friends, relatives, and other people you know. You can also check out craigslist.com or angieslist.com.

When you get into the nitty-gritty of real estate investing, you’ll become aware of tons of tools and techniques that can help you find great deals and make a healthy profit. In fact, you can learn plenty of strategies for investing right here in ETR. But when you’re just starting out – before you’ve made a single offer on a single property – make sure you set your goals, determine your abilities, and line up your resources. You’ll be laying the foundation for a truly successful career in real estate.

[Ed Note: Dean Graziosi is a real estate investing expert, teacher, and author who began investing at 18. His book, Be a Real Estate Millionaire is a New York Times, Wall Street Journal, Amazon.com, and USA Today best-seller. For an ETR-reader-only special on this book, go here.

Once you've got a solid foundation with Dean's guidelines for beginners, you'll be ready to start learning the techniques that will make you rich. You can get some of the biggest secrets to churning out cash from 14 of the world's experts in wealth - including real estate specialists Dave Lindahl, Marko Rubel, and Jim Fleck. Learn how to take advantage of their proven money-making strategies right here.]

You’ve probably read some excellent ideas in ETR on how to stand out from the crowd of investors competing for the same properties, as well as some nifty little tricks on how to mail letters of interest to sellers that will get opened and read.

I’ve been investing in real estate for 20 years, and I’ve been able to make millions using many of those strategies to find potential deals. I’ve also used time-tested techniques borrowed from direct marketing. However, when I saw the current down market coming, I knew I had to figure out a new way to sift, sort, and screen through the imminent flood of thousands of foreclosures.

What I decided to do was throw out conventional "investor" thinking and take a strict marketing approach. In other words, if I were trying to market a product to a targeted group of people, how would I do it – and how could I automate it?

What I came up with was a method of attracting pre-foreclosures that has revolutionized the way investors can find and profit from them. I call it the Automated Foreclosure Finder.

It completely reverses what every other investor is doing. Instead of making "cold" contacts with people in foreclosure, you use my finder strategies – and then sit back and let them contact you before they go into foreclosure.

This not only gives you a jump on investors who rely on public records or paid listing services, it also eliminates the grunt work. It sifts, sorts, and screens out the bad deals, so you wind up spending your time only on the best deals… deals that are delivered to you automatically.

Here’s how it works.

Finder Strategies

I use direct-response marketing methods to create "finder strategies" – ads that drive qualified prospects to me. I use classifieds, business cards, flyers, mailers, yard signs, and even Google AdWords.

Like all good direct-response advertising, these finder ads:

1. Have a compelling headline to capture my prospects’ attention
2. Make a big promise to create interest.
3. Ignite a desire to find out more.
4. Tell my prospects exactly what action to take

The key to making these ads work is to make sure they offer helpful information to people facing foreclosure. People facing foreclosure experience a wide range of emotions. They can be angry, afraid, depressed – even ashamed. Most of them will be looking for ways to stop the foreclosure and save their homes. They want a solution to their problem… and they want it fast. The only thing they’re interested in is ending their pain. The finder ad should do that for them.

Remove Psychological Barriers

To automate the prospect-finding process, all of my finder ads direct prospects to a 24-hour information line. This is a technique that smart marketers have used for years. Your finder ad should clearly state that they are calling a free recorded information line. This makes calling a non-threatening action for the prospect to take. They know they don’t have to talk to anyone when they call. They don’t have to be afraid of being "pressured" into anything. It’s risk-free, so anyone who is even slightly interested will make the call.

The message they hear when they call, again, follows tried-and-true direct-response guidelines. My message, written by a professional copywriter, is empathetic to their situation. It gives my callers seven options they can take to stop their foreclosure. It also gives them specific actions to take, depending on where they are in the foreclosure process. Then it qualifies those prospects for me.

After presenting all the options for preventing a foreclosure, I offer them one more. The option that if none of the solutions I have suggested work for them, "I may be able to buy your property" and prevent the foreclosure. Then my message states the questions I need answered before I can consider purchasing their home. Questions like:

• How much is owed on your mortgage, and how many missed or overdue payments are there?
• What is the location of your home – as well as its age, square footage, and the number of bedrooms?
• What is the condition of the home?
• Do you have an appraisal for the home?
• Has a "Notice for a Sheriff’s Sale " been sent?
• Has the bank sent a list of additional expenses owed to them for the foreclosure process?

The first thing this message does is give them an understanding of the reality of their situation. The second and most important thing it does is help gain their trust. It also helps to screen out the deals that would not work, or that I don’t want, and leaves me with the best of the best to choose from and pursue. I would rather talk to 20 qualified prospects than 100 prospects I have no insight into.

Position Yourself as an Advocate

Although the finder ad is designed to attract people long before they show up on any foreclosure lists, some of the people who respond to you will have had some kind of run-in with another investor. That investor may have left a bad impression – the impression of being solely interested in taking the property for profit. That’s why it’s important to position yourself as an advocate, not as an "opportunistic" investor, in your finder ads and recorded message.

By providing your prospect with a number of potential, step-by-step solutions for them to stop their foreclosure – and only briefly mentioning the possibility that you might be able to buy their home – you are 99 percent more likely to be perceived as being on their side.

Putting It All Together

A sample finder strategy used in a classified ad might look like this:

Free Foreclosure Help
Learn What to Do If You Are at Risk
FREE RECORDED MESSAGE
Call anytime, 24 hours a day, xxx-xxx-xxxx

An ad like this drives people to your recorded message. The recorded message educates them, screens them, and provides a way for them to contact you or request you to contact them. The ones you ultimately do contact are highly qualified. You can get as specific as you want with your message. The beauty of it is that this method will sift, sort, and screen the best possible deals for you, every day, 24 hours a day, seven days a week.

Don’t Forget the Internet

Another thing I do is drive prospects to a website that contains the same helpful info as my recorded message. From the website, I can capture their e-mail addresses. Then I send them a series of automated messages that drip out professionally written e-mails that repeat the helpful information and also remind them that I am here to help.

This method saves so many wasted hours that, in itself, that would be enough for any investor to be excited about it. But the fact that it drives deals to your door before other investors can even get wind of them makes it unique… and highly profitable.

[Ed Note: Dean Graziosi is a real estate investing expert, teacher, and author who began investing at 18. His first best-seller, Totally Fulfilled, explains his unique "core" approach to optimal results, success, and fulfillment in all areas of life. His second book, Be a Real Estate Millionaire, has already appeared on best-seller lists of The New York Times, The Wall Street Journal, Amazon.com, and USA Today. For an ETR-reader-only special on this book, go here.