So ive started to attend foreclosure auctions to try to learn more about investing and on a smaller level to network. Ive come to the conclusion that foreclosure auctions are more beneficial for fix and flips than for buy and hold strategies because you have to buy at a lot less to renovate and get good cash flow where as you can flip a property bought on slimmer margins and still profit. Also the loan products ive seen for hard money lenders seem to finance higher LTVs and %ARV for flips than rentals. Am I missing something or is it already common knowledge that these auctions dont benefit buy and hold rental investors?
Additionaly, what is a better way to acquire buy and hold properties?
I am currently building a list for direct mailing, hopefully this will return some leads.
Foreclosure auctions are county specific. In some counties you will have very good luck buying in other it will be very competitive. I am in the Chicago area some counties the auctions are very tough and you have to just through a lot of hoops those work out best for people like me. We are buying everyday at these. The tile can be one of the biggest issues if you do not do proper research. As far as wether you are buying for flips or cash flow generally it will not make a difference. With cash flow properties you have a little more margin for error. With flips number for auctions will be a bit tough. Totally will depend on your area and amount of competition at the auctions. In chicago the amount of hoops most investors have to jump through is a lot so the toughest auctions are best for pro investors with plenty of cash. Plus a lot of the properties we buy are occupied. It can take anywhere from 3 months to a year to get people out. Personally if you get good at direct mail and follow up you may have a lot less risk. If you have the reserves and the ability to get title and other risks covered when you are buying at auctions then you may be ready. Generally Foreclosure auctions at the county are a very bad idea for most investors. The risk is very high if you do not know what you are doing.
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