Would Hard money lenders transfer money to your bank or only to a title company? The reason I ask is because home court auctions require 100% payment in Money order or cashiers check. Without the money in the bank, I can just get a money order / cashiers check ready in preparation to bid on auction day. Any idea with this guys? Your input is greatly appreciated.
Typically a HML that funds would do so at closing. Any HML willing to wire funds to you first is giving you an unsecured loan. If he has great rates send him my way:)
Pretty much need to have the cash already for those auctions that require full payment by end of the same day.
Not all auction require it right away. Some give 30 days to close.
@Christopher Phillips thank you for the insight. I'm not sure how this all works out. So if the auction requires full payment in 30 days with a deposit, I can do the deposit then then the HML would pay the rest directly to the title company? Is that how it works?
@John Thedford I really don't know how this all works out. Thank you for your input. I'm going to research unsecured loan as well.
@Paul Vang yes. that is correct. Every auction is run a little differently, but there are many that allow for 30 days to close.
As an example, court house steps auctions near me require certified check of 10% deposit of your planned bid to participate. Then 30 days to close.
Some other auctions want a small deposit to participate, then full payment by that afternoon.
It really depends on the auction rules.
I think in the Sacramento, CA area, they require payment in full on that day. I'm going to do some more research and look around the neighboring counties to see what their requirements are.
@Paul Vang I use a line of credit from my bank. If you can get one it is a good way to go. That way I only borrow the money for the day of the auction unless I'm successful.If I'm successful I keep the loan out for a few months while I rehab and then either sell or rent/refinance and then I pay back the Line of Credit. The interest rates are around 5% so much more reasonable than hard money.
Generally you'll need some asset to secure the line against so this won't work if you're just starting out. But if you're just starting out I would suggest you start with something less risky anyway.
@Jeff Kehl thanks for the insight. I never thought about that.
Generally speaking HML typically will want to analyze your deal to make sure they don't fund something that doesn't have equity or is not in their best interest. They don't give you the cash without having some sort of collateral. Buying homes at the courthouse steps, you typically will need to have funding in forms of cashiers checks. I have not bought from the courthouse steps before so I'm not sure about the full payment, but from what I know - you do need to sign over the checks to the courthouse auctioneer when successfully bidding. Good luck -
@Yia Her thank you for the insight. From my research, full payment in for form of cashiers check is required for Sac County.
Hi Paul, I have the same question about auction in Sacramento. Did you ever figure out how to get funds for bidding with cashier's check? Let me how it works. Thank you
You can also do this with private money. Just make sure that you get the title work done properly or you could lose a substantial part of your investment even if you got a great price.
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