Is buying from an ONLINE auction risky?

Question

Hey guys!

It's widely known it's a lot harder (but not undoable!) to find good real estate purchases for buy and hold properties, since it seems lots of action took place during the last 1-2 years. If you research an area (say, Vero Beach, FL), you will notice it has about 3000 RECENTLY properties, with some 250 for sale and another 450 foreclosures, and this scenario seems to go to almost every market that I researched.

It seems the only good buys I could find were auctions, however, being a very small buy and hold investor, it seems to me very risky to buy a property WITHOUT an inspection especially being in another state... I realize that sometimes the deal is so good (like 55k home in an area where median home price is 100K) that you think you have all that 45K leverage to fix up the messed up foundation in case there's an issue and still cashflow... But what if you have a full-time job and you DON'T want to deal with that?

What was your experience with ONLINE AUCTIONS? Do you consider them risky if you live out of state?

Andy Collins · Answer

I'm in the process of buying one from an "auction site" now, but its in an area I own rentals, and only about 15 minutes from my house, and I got an inspection period even though the site says there isn't one (remember state law will often overrule what the site says).

I would NEVER buy a house from pictures on the internet only,,,that's a great way to be burned,,investors close to the property have a chance to see it and know what  its worth.

Always remember, to "win" an auction you aren't really winning, just paying more than anyone else is,,,you don't know if you "won" until later

Steve Foth · Answer

I've never bought from an auction, but I did a search and read have read quite a lot about them.  You have to do your due diligence and make sure the deed isn't for a 2nd mortgage, there aren't tax or other liens, etc.  There is a lot to read about..check it out:

http://www.biggerpockets.com/search?utf8=%E2%9C%93&term=buying+from+auction#topics

Edita D. · Answer

I am surprised I got no responses so far. I wonder if investors mostly buy local or If I asked a dumb question :)