so currently I am in an online property auction where I just went up to 100k for the property, which is fine. The house is valued at 260k and it would be a buy and sell to give myself a good profit, I'm trying to decide what to do for funding such as using hard money or going the traditional bank way. I'm not even sure a bank will fund this for me though? Any thoughts?
I'm curious if you've done a title search on the property. $100k for a $260k property sounds too good to be true. Are you sure it is the 1st mortgage that is foreclosing and not an HOA/COA or the 2nd DOT? Be careful, I've dealt with many people that contact us after a purchase only to find out the bought a foreclosure for the 2nd and still owe the 1st.
from what I gathered there is no mortgage and the auction is guaranteeing it to be free and clear if anything were to happen. It's actually a trustee auction so the home isn't actually in foreclosure
I'm not sure which site you're using (I've used auction.com before), but I see some big problems potentially in your future.
1) Never bid on something at an auction if you don't have the funds to close. I highly doubt you will be able to view the property to estimate repairs and get an appraisal, which is required for most hard money lender. Most online auctions require an EMD or bidding fee, which if you can't produce cash to buy the property, you will forfeit.
2) Never buy a property from an auction without doing your own title search prior to bidding. Many properties which comes through the auction block are unable to get title insurance for various reasons, so you need to be on top of your game to ensure you don't get burned.
3) If the home is at a trustee auction, its likely that the home was already foreclosed upon due to loan default or tax default. Feel free to correct me if I'm wrong here, as I don't know what online site you are using.
4) Just because one lender has foreclosed on a property does not mean that the title is free and clear. Several types of encumbrances (HOA Leins, Tax Leins, Etc) can remain on the property after the foreclosure process. You may buy the property, but you also get any liens which supersede the lien that foreclosed.
I highly recommend you proceed with caution. Trustee auctions are not a great place for beginners to start, as there are many details that can be overlooked and you can get burned.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.