When I picked up The Foreclosures.com Guide to Making Huge Profits Investing in Pre-Foreclosures Without Selling Your Soul, alarm bells went off in my head. Besides being too long, the title seemed to indicate that this was yet another flimsy get-rich-quick scheme. But I was wrong. The book is actually an excellent guide for those who are interested in capitalizing in the megatrend of foreclosures.

The book's author, Alexis McGee, has spent over 20 years in the foreclosure business. She operates the foreclosures.com website, which collects data on troubled real estate properties.

No doubt, things look bright for foreclosure investors. With several years of aggressive loan practices and the meltdown of the mortgage industry, there's certainly no shortage of foreclosure properties.

Yet there is a problem: Doesn't successful foreclosure investing mean that you have to be a cold-hearted vulture? Aren't you throwing families out of their homes?

Turning distress into opportunity
Early in the book, McGee tackles this issue and sets forth a "white knight" approach. In other words, she thinks you can actually be helpful for the distressed homeowner.

How? She believes the ideal time to make profits is before there is a foreclosure. At this stage, you can offer a certain amount of cash to the homeowner, which staves off foreclosure and a wrecked credit rating. What's more, the homeowner may then have some resources for a fresh start.

The goal is to get the property at roughly a 30% discount to its fair value and then to make the necessary improvements. You should then be able to sell the home for a nice profit, which McGee pegs at about a 15% return on invested capital.

Money for nothing?
Pulling this off does require lots of work. Basically, you need to have a strong understanding of your local market. There are good online resources, such as Zillow, Move (NASDAQ:MOVE), and HomeGain. McGee even provides extensive checklists.

And that's not all. You also need to get up the courage to "walk up to complete strangers and discuss the very personal issue of money problems." McGee thinks this is the best way to find the good deals. According to her, "You must be a combination of television talk show self-help gurus Dr. Phil and Dr. Laura."

Something else you need: the thick stomach for cold calls. McGee does provide some helpful advice on how to refine your pitch, as well as deal with objections.

At the same time, McGee talks about the risks of foreclosure investing. For example, avoiding the services of an experienced attorney is a big mistake. With the complexities of the real estate law, it's easy to blunder on critical issues like the chain of ownership.

Buying in a down market
Another big risk is not being able to resell the property for a gain. Interestingly enough, McGee seems to discount this -- despite the tough real estate market. So long as you find the right location and make the necessary improvements, she thinks you should be able to get a good price on your property.

But I'm not so sure. As seen with the stock prices of various homebuilders like Hovnanian Enterprises (NYSE:HOV), D.R. Horton (NYSE:DHI), and Lennar (NYSE:LEN), things look fairly bleak. As we've discussed elsewhere, home prices aren't just falling, they're falling faster and faster.

If home prices continue to decline for the next couple years -- which seems reasonable -- then can you really make profits on foreclosures? Unfortunately, McGee doesn't provide much color on the subject; this omission turns out to be the book's biggest weakness.

If you are interested in foreclosure investing, this book will prove helpful (although it's probably a good idea to take things slow).

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 5,691 out of 36,219 in CAPS. The Fool has a disclosure policy.