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Buying a preforeclosure — a home not yet in foreclosure — can be a worthwhile investment. Whether you use the property as your home or as an investment, helping a distressed homeowner who needs to sell can be a beneficial experience for both parties. Many people, in fact, make a full-time profession of purchasing preforeclosure homes and reselling them.

You can, too.

To contact preforeclosure owners you must first locate them. There are several excellent ways to find preforeclosure owners such as in newspaper ads. But with the average cost of a two-line newspaper ad costing between $200-$600 per day, this can get very expensive very quickly for a homeowner looking to sell.

More and more, subscribing to an online preforeclosure service such as www.ipreforeclosures.com has become the most effective way to locate preforeclosure owners. With a resource like this, you are guaranteed workable preforeclosure leads.

The next important step — where many investors often struggle — is to contact these preforeclosure owners.

Some investors mail letters to all of the preforeclosure owners in their cities. This blanket approach, however, is not effective for most independent investors. Instead, think quality rather than quantity. For example, focus on identifying several zip codes that you are interested in making an investment, and eliminate all those properties not in those zip codes.

The reason for this is simple: It’s virtually impossible to become a smart real estate investor in several areas unless you have unlimited time and resources.

It is important that you become very familiar with the real estate market in the few areas that you target. This will ensure that you make informed decisions on what to offer for properties in preforeclosure. As you become familiar with an area, you will know if new road construction is planned, for example, which may negatively impact your investment. Or, you will know if commercial rezoning has been approved close to your area.

Being on top of local issues like these can make or break your purchase.

Becoming very familiar with a few areas will also give you insight into when a preforeclosure on www.ipreforeclosures.com is a “diamond in the rough.” You may be able to find a gem with a high resale value, for example, if a school district changes its boundaries to include homes in a new neighborhood.

Once you have identified homes in a high resale area, it’s best to contact the preforeclosure owners by mail. You may expect to send 1,000 letters a year to preforeclosure owners. But if you close 10 deals a year that net $15,000 to $25,000 per deal, you will have created a very successful business for yourself.

It is important that your letters appear to be professionally written. If you need to pay an experienced writer to compose your letters, it is worth it. This is your business and any small investment you make in it will help guarantee its success.

Don’t be discouraged if you don’t hear from anyone after making contact with owners by mail. Most preforeclosure owners are in a state of denial about losing their homes. For this reason, you should contact them on a regular basis.

For best results, contact your database of preforeclosure owners once every week or every other week with original letters — no form letters or postcards. Each letter should reference the previous and should be slightly different. All letters should be individually signed and mailed with a first-class postage stamp.

In addition, purchase a stamp that says, “ADDRESS SERVICE REQUESTED” and place it one-quarter of an inch below your return address. This way, if an owner has moved the post office will give you the property owner’s current address.

People seem to be more receptive to mail received on Saturday. Therefore, mail your letters on Thursday so they arrive on the weekend.

Letters should appeal to the emotions of the preforeclosure homeowner because this is a difficult time for them. Accordingly, your stance should be one of wanting to help. Make it clear how you can assist them, including offering cash for their equity, finding them a new place to live and keeping them from having a foreclosure on their credit history — something that could make it extremely difficult to qualify for a home loan for up to seven years.

The main goal is to keep your name and phone number in front of the troubled homeowner as much as possible so that when they are ready to ask for help, they will contact you.

If you have selected an area and home with high resale value, and you have negotiated with the homeowner so you net $15,000-$25,000 or more on the deal while helping the homeowner get a fresh start, you both win.

The best deals always produce two winners.

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