I was looking at a foreclosure auction - where the HOA is foreclosing on a property due to non-payment for association fees (approx $10K). It appears that the Bank (1st) has not started the foreclosure process yet, and wanted to know if I win the bid what right does this give me as I would own the 2nd? Apparently, the owner is no longer in the property - the property is empty. Can I rent the property out until foreclosure happens? How do I go about getting my initial investment back?
Thank you in advance!
You would not own the property, you would only buy the HOA's lien position. All you can do is invest the $10K and wait for the owner to sell or get foreclosed. Maybe they are making the payment. You have no idea how long it will be before the property is sold and when it does, will there be anything left to pay off your lien? I may offer them $5,000 for their $10,000 position, but that is money I would have to be willing to lose.
If you were to win the auction, in most places you would own the property, but only until the more senior liens foreclose. Some people in FL do buy these at auction, for the purpose of collecting rent until they lose the property. Whether you can recover your initial outlay depends on rents and expenses and how long it takes to foreclose. Whether you consider it legal / ethical to collect rent and let the mortgage go unpaid ...
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