To go from home owner to successful pre-foreclosure or foreclosure investor, the first step is to plan your transition. The key to success in real estate investing is to be constantly making money. Therefore, even if you own only a single asset at a time, you need a plan for choosing the right investment property and making such decisions as how to finance the property, your exit strategy, and whether to repair or re-model the property.

The great thing about pre-foreclosure and foreclosure investing is that you don’t necessarily have to pay for everything on your own. You can partner with other investors and, if you rent out the property you buy, have your tenant not only cover any loan repayments, but essentially purchase the property on your behalf. Investing in pre-foreclosures and foreclosures also enables you to take advantage of a number of exit options. “Home flipping”, for example, is the term used for investment deals involving buying, fixing and subsequently selling properties for a profit.

Plus, since you are focusing on pre-foreclosures and foreclosure properties, you can potentially get a significant discount to the retail value of the property you buy. That’s a major reason why these types of properties are ideal for a home owner who wants to get started in property investing.

If you are starting out in real estate investing, you may adopt an approach whereby you pay off your current home, and try to save enough to invest in another property. The downside of this approach is that it can take an inordinate amount of time. You don’t have to wait! There are alternative ways to invest in pre-foreclosure and foreclosure properties that are simpler and faster.

If you wish to begin conservatively, you may decide to invest in, for example, a pre-foreclosure or foreclosure property that would make for an ideal vacation home or second home. Ongoing demand for such properties makes them relatively easy to sell, which allows you to further invest in similar or other properties.

Renting out your existing home while buying and moving into a low-priced pre-foreclosure or foreclosure is another way to get started in pre-foreclosure and foreclosure investing. Yet another approach is to sell your family home in order to have the money to invest in two or more other pre-foreclosure or foreclosure properties, one of which you live in, the other(s) you monetize.

You can also take advantage of the increased value of your family home (if applicable) by refinancing it or taking out a second mortgage in order to invest in one or more other properties.

These are just some of the ways you can make the transition from home owner to pre-foreclosure and foreclosure investor. Over all, I highly recommend pre-foreclosure and foreclosure properties for someone starting out, as they can be purchased relatively cheaply and pose fewer risks than many other kinds of real estate investment.