Rental Property Investor · Fairfield, CT · Member since 2018 · 47 posts · 27 votes
Hey there. Tony Fox from CT here. Looking to see how I can buy homes at auction. My dilemma is that I do not have enough liquid to potentially bid +$200k and compete with bids. I've been doing some research but wanted to pose the question:
What is the best way for me to bid at auctions but need more cash? Any alternative solutions for financing this?
Hey there. Tony Fox from CT here. Looking to see how I can buy homes at auction. My dilemma is that I do not have enough liquid to potentially bid +$200k and compete with bids. I've been doing some research but wanted to pose the question:
What is the best way for me to bid at auctions but need more cash? Any alternative solutions for financing this?
You probably need to find hard money and/or private lenders that are willing to lend to you on a project. You'll need the 10% down yourself but if you have those relationships built, you can get the money done within the 30 day timeline. Good luck.
Search hard money lenders in your area and talk to them about their lending criteria and speed. Contrary to the above post, you should be able to find a hard money lender who can underwrite and fund your deal within 2-3 days.
I work with local hard money lenders in Arizona and Wisconsin to fund my auction buys. They have no problem underwriting the deal in 24 hours. As Scott mentioned, there's probably a lender in your area that will do this too. HMLs are stumbling over each other right now for deals. If you can bring them some (and pay the loans back) your terms will continue to improve (less money down, lower rates/fees). Good luck Tony!
Hard or private money is probably your option, I have bought at sheriff sale and used local bank commercial lending, but you need to have an established relationship.
Some jurisdictions are requiring proof of funds to bid, and in most cases require 10% cash at time of sale in hand, several counties I have bought in require you to register and show the sheriff your cash or money orders. I typically use my lines of credit secured by the equity in my rentals to buy.
Hi Tony, As I'm sure you know, most auctions don't guarantee clear title. This is just one of the high risk aspects of buying at auction that spooks private lenders. That said, hard money lender like these guys are saying is one option. For local banks etc. that you can build a relationship with, it's likely worth trying that at some point, as obviously you'd get better terms. I'd caution though, you may have to try many local banks to find one that's willing. Again due to the high risk (but never say never).
One path you might try.... go the road of HMLs to start, heavily document each deal along the way, so that you can then point to a successful track record when speaking with a local bank, and you'll be able to demonstrate that you know what you're doing. For example, property one might look like... borrowed 300k from a HML at x%, property purchased for 200k at auction, rehab costs, property taxes and realtor commission totaled 60k, profit earned before taxes paid = 40k and so on. The employee(s) at the bank may know absolutely nothing about real estate. So being able to talk through your successes with the paper trail to demonstrate them can go a long way (include a few graphs or pie charts... a lot of bankers like visuals).
This same paper trail approach can also be leveraged when seeking outside investor money. Outside investors, like banks want to see a successful track record... and a repeatable system that is generating profit. Wish you much success!
Hey there. Tony Fox from CT here. Looking to see how I can buy homes at auction. My dilemma is that I do not have enough liquid to potentially bid +$200k and compete with bids. I've been doing some research but wanted to pose the question:
What is the best way for me to bid at auctions but need more cash? Any alternative solutions for financing this?
Tony, I have purchased quite a few homes at live auction. Hard money + your cash = win. Make sure the hard money sources you use, can fund within 24-48 hours. Give them as much notice as possible- definitely pre-notice before you head to auction. Good luck.
Hey there. Tony Fox from CT here. Looking to see how I can buy homes at auction. My dilemma is that I do not have enough liquid to potentially bid +$200k and compete with bids. I've been doing some research but wanted to pose the question:
What is the best way for me to bid at auctions but need more cash? Any alternative solutions for financing this?