Buying foreclosures discussion

[RBP]

I am going to be in the market a year from now, which means I need to learn this now, and start looking in 6 months. It's my understanding that, especially for government owned properties, the process can take forever.

I'm not even completely sold on the idea, but I want to explore it. I have it in mind that I can find the right deal, take equity in the loan to pay for the repairs and upgrades, and do it with an appraisal based down payment (no cash) that I keep hearing about. I am willing to put in the sweat equity for the right deal.

My pipe dream target is an appraisal at $250k, a foreclosure offer at $125k, a loan at $200k, $75k cash out for remodeling and cash to me, and the $50k to appraisal is the 20% down on the loan. I have already located a couple properties that fit that math in theory.

Does anyone have any experience with this?

[PorkChopSandwiches]

If you can get a good deal in a decent area it a great way to make money. Dealing with short sales can be time consuming having to go back and forth with the bank, but they typically like to get the properties off their books so they will sell at a loss. Foreclosures on the other hand have to go to auction (at least here in CA) so you will have to compete with other bidders. You need to be patient and know your price point, it easy to get caught up in bidding and overpay. In CA its really tough because we have a lot if idiots with money and a lot of the auction prices are ridiculous for a flip, so you end up having to hold them long term for the equity to grow, and holding anything long term can be risky and expensive.

[RBP]

Thanks, Porky. That's helpful. I was trying to figure out the process, as some are listed as short sales, some auctions, some foreclosures, and the scariest category of sale as-is while occupied. wtf? :lol:

My intent is to take my time and use the first one as my primary residence for the experience and practice. If I think I am decent at it, I will go slow and flip one next. I won't necessarily need the income, but I do need to build some longer term wealth.

[PorkChopSandwiches]

Its a great way to build wealth. Its important to have professionals on hand to do work as well. When trying to flip a home your goal is to hold it for as little time as possible, since every month you have to make a mortgage/insurance payment. So having a good network of pros that can get in and get things done quickly is key. You can't do everything yourself, and even if you can you could end up losing money by not paying for the work to get done because you help the property longer. But, if you will live in it, its not as big a deal.

[Teh One Who Knocks]

If you can get a good deal in a decent area it a great way to make money. Dealing with short sales can be time consuming having to go back and forth with the bank, but they typically like to get the properties off their books so they will sell at a loss. Foreclosures on the other hand have to go to auction (at least here in CA) so you will have to compete with other bidders. You need to be patient and know your price point, it easy to get caught up in bidding and overpay. In CA its really tough because we have a lot if idiots with money and a lot of the auction prices are ridiculous for a flip, so you end up having to hold them long term for the equity to grow, and holding anything long term can be risky and expensive.

All foreclosures in Colorado go thru auction as well. And when we were looking for our house 4 years ago, we saw some short sales and our real estate agent said those a major pain in the ass to deal with.

[PorkChopSandwiches]

All foreclosures in Colorado go thru auction as well. And when we were looking for our house 4 years ago, we saw some short sales and our real estate agent said those a major pain in the ass to deal with.

They are, take months of negotiations sometimes, so if your looking to move in its probably not ideal. But, if you have the time it can be done and you end up with a lot of built in equity

[RBP]

All foreclosures in Colorado go thru auction as well. And when we were looking for our house 4 years ago, we saw some short sales and our real estate agent said those a major pain in the ass to deal with.


They are, take months of negotiations sometimes, so if your looking to move in its probably not ideal. But, if you have the time it can be done and you end up with a lot of built in equity

I expect the first one to be painful and frustrating, and that's okay with me. The reason I am starting now is because I want to move a year from now; that seems like a decent time frame to get this done.

[Teh One Who Knocks]

I expect the first one to be painful and frustrating, and that's okay with me. The reason I am starting now is because I want to move a year from now; that seems like a decent time frame to get this done.

Like Porky said tho, be careful at the auctions, it's easy to get caught up in it, especially if it's a property you kinda have your heart set on. And you can easily overpay and actually end up losing money.

[RBP]

Like Porky said tho, be careful at the auctions, it's easy to get caught up in it, especially if it's a property you kinda have your heart set on. And you can easily overpay and actually end up losing money.

Message received, Thanks! I am not approaching this emotionally. No dream home fantasies. The girlfriend will probably be more inclined to think things are too big or too fancy. :lol:

The beauty is, we are under no pressure, no immediate need for space etc, and we are fine with apartment living. Hell, if I didn't live below Stompy McStomperson, we'd probably be planning to stay in the apartment for a few more years.

I am looking for a good investment that provides an enjoyable living situation. :shrug: Plus learning how it works to repeat the process on other properties as flips.

[RBP]

First team targets are an agent and an inspector.

[Pony]

A good inspector will go a long way, unseen structural issues could break you. Do research to make sure there is no liens on the property. Knowing the neighborhood/area is a big one too, buying something only to find out the area had been sliding downhill would not be fun.

Moving in while doing renovations is a good plan, too many people decide to get into this thinking they can make quick money flipping in a couple months, then find out the work is above their skills and have to hire contractors, costs skyrocket and every month you pay the mortgage is another month lost profit.

[RBP]

Thanks, Pony. Good call on the title search. Structural issues are my biggest concern. I will run, not walk, on those.

[PorkChopSandwiches]

You can contact a local title company (I use First American Title) and request a property profile. That will give you detailed info on the property (including liens). Just get yourself a rep, then its as easy as emailing them the address and they will email you back the details, and its free.

[PorkChopSandwiches]

Here is a link to one I pulled in the past. If you're interested

https://drive.google.com/open?id=0B3lgswOSID3OMTJDMzJEMDA3MUQ5RkQzODowLjE

[RBP]

Title rep team member is separate from RE agent, correct?

[RBP]

Here is a link to one I pulled in the past. If you're interested

https://drive.google.com/open?id=0B3lgswOSID3OMTJDMzJEMDA3MUQ5RkQzODowLjE

That's pretty awesome.

[PorkChopSandwiches]

Yes, the title company is where the real work happens when buying/selling property. A real estate agent is fairly worthless this day in age.

[Noilly Pratt]

I had a friend do that, and around here in BC - most of the houses he found this way used to be grow-ops. And, he found that a bunch of people bidding were probably other would-be dealers wanting to get a ready-made place and pick up where the other dude left off. He was threatened more than once.

So, be careful out there!

[Pony]

Thanks, Pony. Good call on the title search. Structural issues are my biggest concern. I will run, not walk, on those.

Also asbestos and local regulations on dealing with lead paint.

[RBP]

I want to make sure I understand. The bigger money is in foreclosed property sitting in bank inventory that they are itching to dump. Versus a short sale where both the seller and the lender are trying to salvage as much of the remaining loan balance as possible. The latter feels more contentious, while the former is like getting rid of your ugliest daughter for whatever the sheep farmer will pay.

[Teh One Who Knocks]

Sheepist :hand:

[PorkChopSandwiches]

I want to make sure I understand. The bigger money is in foreclosed property sitting in bank inventory that they are itching to dump. Versus a short sale where both the seller and the lender are trying to salvage as much of the remaining loan balance as possible. The latter feels more contentious, while the former is like getting rid of your ugliest daughter for whatever the sheep farmer will pay.

It just depends

[Loser]

If you don't know basic structure building and foundation inspection, I wouldn't bother.

Yes, you can pay an inspector, but I've seen them drop the ball on numerous occasions.

Let me just state this. The last foundation I fixed for a customer cost them almost 60,000$. Their "inspector" missed the fact that the wall has been anchored, and then drywalled over.

When they found out their basement was a swimming pool we fixed it.