BP is a great resource for helping others navigate the pitfalls of the REO world.

I definitely have opinions on it, and can help you navigate around the pitfalls.

The bank has to sell at a reduced rate to stop the pitfall.

Welcome Kyle,You are about 100 steps ahead of yourself, of course you want to know the pit falls of the business, but going down the rabbit hole of 'what ifs' before any of them ever happen (if they even WILL happen) is a wrench in the cog of the machine for sure.

@John ChapmanCan't argue with that logic or the reality of the C class and lower rental.When people look at the rental bizz.. they do focus on the highest cash flow possible but do over look the pit falls and many until it is way too late.You take the Portland OR. market were I live..

Welcome to BP Lex.Yes, there are some serious issues with a newbie trying to wholesale pre-foreclosures, like federal laws about contacting one who has received a notice of foreclosure.It's been beaten to death here, suggest you use the search box, use your title, it should pull up pages of posts of the pitfalls. :)

Any pitfalls?

Can someone walk me through the pitfalls of this, or maybe how something like this happens?

What are the major pitfalls to watch out for?

There are VERY few affordable homes, all the large builders in the area have been building homes in the $140k-$180k range, while many of the new jobs comming into the area pay a rate that doesn't work well with these ranges.Anyway, we got to talking, and it seems he enjoys building smaller, more affordable homes, rather than the 3k-4k square feet homes he's been doing.So , the best thing to do would be find lots in an area and build....But there aren't any, in fact in my town there are VERY few lots to build on, and most are splits from already existing, double lots.So, after talking to him ,it seems the best way to do things would be find an area that's developable and do it.So, i'm curious to know what pitfalls thoes of you who have done this (Succuessfully) and try to learn.