Atlanta, GA · Member since 2016 · 41 posts · 19 votes
Goodmorning BP!
I'm an 18 year old college freshman, trying to get started on real estate investing. Bigger pockets has been such a blessing & has networked me with some amazing people, advice, and knowledge.
That being said, I was wondering is it possible to use OPM (other people's money) at an foreclosure auction? I obtained a list of almost 400 properties and I've weeded through them and found a few potential good deals. (Dallas Fort Worth Area)
Do y'all think just finding a good deal and flipping it is a good way to start, opposed to wholesaling or other methods?
Is it possible to borrow with no credit or income?
-Thanks, Trey
Welcome to BP! The fact that you're starting off so young means you already have a huge advantage; you have more time to grow! The easiest way to use OPM is by having great credit. Albeit a loan from a bank or non-traditional money lenders, if you have a high credit score it will be easier to get your projects funded.
Regarding your last question, would you lend money to someone with no credit or income? Until you have a track record you probably won't be able to get any private money.
Buying at the auction is risky. You don't have time to do a good evaluation of a house before the auction. So often you find expensive surprises. Don't think it is a good option for house number 1-5.
Plus with auctions you need essentially cash from my understanding. I believe you need to put a large deposit on the house and then pay by the end of the day if it is a regular foreclosure auction on on the court house steps.
I have gotten emails asking for help at auctions before from George.
You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.
As a college student, I think the best way for YOU to start would to follow in the footsteps of @Brandon Turner! Young, flexible, first home buyer (I'm assuming)... buy yourself a duplex, rent the other side out for as much of the mortgage as you can, fix it up over a year's time and then sell it! Maybe You can qualify for some first time buyers' credits.
Although a complete REI rookie, I'd have to agree with Lydia B. I wish I could go back to when I was 24 and built my first home....I would've "house hacked" instead. Bought a duplex, fixed it up and rented out one half as I lived in the other. Seems to me, that is one of the best ways to cut your teeth in this business.
Foreclosure auctions have a certain appeal (excitement, adrenaline, etc.) but are not for the faint hearted. If I were you, I would focus on sourcing deals in less risky ways.
Here is the one truth that a lot of new wholesalers/bird doggers/investors don't get:
If you have a true deal, investors will line up on a waiting list to take it off your hands.
If you put your focus 100% on finding deals, you will make money. Learn what a deal is. Ask buyers at REI meetings what kind of deal they are looking for (neighborhoods, price range, etc.). And then start looking for those deals. It's hard work. But it pays off.
Having said that, if you want to get into foreclosure auctions, I suggest befriending some people who have been doing this for a long time and become their wingman. There are some nice people at the auction. There are also some jerks. Don't let that put you down. Persistence is key in real estate. Offer to run errands for them. Offer to do anything they might need help with in exchange for teaching you the ropes of the foreclosure auction. Then maybe in a year or two you will be ready to do this with OPM, once you have a track record and people know that you know what you are doing.
Keep at it Trey. As many have said...I wish I would have started early like you. Just remember that it's hard work, and then put in the hard work. It won't happen in a few weeks or months, but if you keep at it, your first year could be the basis for a phenomenal journey in real estate and a life of your dreams.
Another piece of advice I would throw out there if you are looking to get into foreclosure auctions, learn to look at county records for liens, and other encumbrances that can affect a title.
Even if you have the cash, which would be quite an accomplishment itself for someone of your age, if you go into these somewhat blind you'll get burned.