2009 Money moves: Buying and selling foreclosures

Making money on foreclosures and underwater properties is a growth industry.

Real estate speculators, who got us into this mess to begin with, are rubbing their hands in glee, reports Fortune magazine.

Billionaire John Grayken of Lone Star Funds, who first made his fortune during the S&L crisis in the 1980s, this July bought up $6.2 billion in distressed mortgage-backed securities. Now he's just waiting for the market to recover.

But you don't have to be a billionaire to play. Some of the best money to be made in the real estate market these days is in managing some aspect of foreclosure sales. And with 575,090 loans nationwide entering the foreclosure process during the third quarter, according to RealtyTrac.com, the business is likely to get better before it gets worse.

Entrepreneur Magazine put foreclosure cleaner Cyprexx Services of Brandon, Fla., on its 2008 "Hot 100 Fastest Growing Businesses" list. The going rate is $2,000 per house for a clean up, fix-up, paint-up job. Some fast workers are doing 15 or 16 houses a month.

Auctioneering foreclosures can be a moneymaker too, whether you are an auctioneer, who takes home about 20% for his trouble, a real estate agent who gets a 3% commission for bringing a buyer to the party, or a lender who hustles over with cash money to grease the skids.

In Florida, where the foreclosure crisis hit hardest, some real estate practitioners are raking it in. "In Central Florida, we are doubling our foreclosure sales from a year ago. Each month is surpassing the previous month," William Nichols, a Kissimmee-area agent, writes in letter to the Florida Association of Realtors.

One thing all players agree on is the need for knowledge. If you don't know what you're doing, you can be badly burned. But if you've got the chops, now's the time to jump in.

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