I'm wanting to purchase an IRS auction as stated above. I would like to hold and rent the property. I have the 10% required to be able to bid, but I have thirty days after that to pay in full. It would be advantageous to obtain a traditional mortgage, but I'm not sure if this will be feasible. I have looked at bridge loans and considered private/hard money and I wanted to get a feel for what to do from people who have done this before. Thanks in advance.
First of all, do a title search now. IRS auctions are generally "only the right, title and interest of"....meaning there can mortgages and other liens staying with the property.
thanks for that. I have already looked in to the property records through the county and it seems ambiguous to me on how you can determine liens or outstanding mortgages. Any help on sorting through this would be a great help.
@Jared May You probably want to ask anyone that works in real estate in the area who the investor friendly title company is there. Then call that title company and let them know you are an investor in the area, and ask if they would be willing to research auction properties for you, to see if they have clear title. You'll want to use them for your title work, and they in return will typically do this research for you for free.
Even if there is clear title, you may or may not be able to get a loan. Many auction properties can not be properly inspected and appraised, because there is no access, or because they don't have water or power. Or they are not entirely habitable. You of course would need an appraisal in order to get a loan. Be warned you may be out your 10% if you cannot secure the loan.
Also be warned you may uncover a very costly septic, well or other problem.
In general my advice is unless you have the cash to cover the entire purchase, and cash to cover major problems you may uncover later, do not buy these types of auction properties.
great advice. I really appreciate it. I will for sure be out the 10% if I'm not able to secure funding. I will be able to access the property prior to the auction for an open house(which is rare I understand) and plan on bringing an inspector with me. Still, I'll be approaching this deal with caution. This may not be the ideal property for me. I'm still pretty green as this will be only my second investment property. Thanks again.
@Steve Babiak thanks for the link.
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