Are auctions a good way to start my REI journey ?

Question

I am on the precipice of my REI journey, and have been reading a lot about buying and rehabbing properties. My original thought was to get into “cheap” areas for immediate income, but I’ve since retracted that idea after extensive research. I’m very interested in buying nicer properties in nicer areas via auction, but have been told I’ll likely be outbid immediately by pros who have unlimited budgets. Is there any hope for us little guys? I’d greatly appreciate any suggestions, advice, or even a little encouragement.

Taylor L. · Answer

Generally from what I see, the pros have mostly stepped back from the auctions because prices are bid up by less experienced new investors, who are willing to pay more because they are less able to judge risks. Little guys are more likely to overbid and get burned.

Go to a local real estate networking event and meet investors in your area. You'll find many who have bought properties at auctions in the past. Make some connections like that and you can get the inside scoop on auctions in your area!

Cornelius Charles · Answer

Buying an out of state property at an auction for a new investor sounds like nothing but trouble to me.

Stephen Brown · Answer

I almost bought my first property at auction and I'm super glad I didn't. I wouldn't have been ready for all the expenses that would have come with it and I found a better property 2 months later that needed minimal work. Be patient and do only what you can handle financially.

I think that it's a great learning experience, but it could set you back as well. So be careful.

Amy Hatcher · Answer

Thanks so much! Just a little background, I live in Southern California, where prices are ASTRONOMICALLY out of control. I’m looking at properties out of state where I can at least dip my toes in the water without them being ripped off and devoured by a great white shark. Makes beginning this journey a little more difficult, but hopefully oh so worth it.

Eric James · Answer

You also need to be very savvy to purchase foreclosures. There are big risks with liens, unknown property condition, etc.

Are auctions a good way to start my REI journey ?

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