Is it difficult to secure a hard money or private lender to purchase properties that are being auctioned. I am new to purchasing auction properties. I assume you have to show proof of funds when purchasing..help please!!
@Babe Savage , welcome to BP! I'm honestly not certain how that would work, since the cash has to be effectively instantaneous at auctions. I don't think proof of funds would work, I believe you have to have the actual funds on hand, or at least immediately available. I could, however, be mistaken since I haven't done one of these. I imagine someone will chime in on the topic before long; I'm hoping to learn some about it myself now that you've brought it up :-P Take care and good luck!
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Good question. Each state is probably a little different wrt when payment is required, redemption etc. Here in California at a trustee sale auction the full amount of the winning bid is due immediately in the form of cashier's checks. My partner buys with my money at the auction, fixes the property, sells and we split the profits, I'm passive, he's active. At the auction he gives crier the checks and has them title in our entity, he gets a receipt. A couple weeks later a trustee's deed shows up in the mail transferring title from foreclosing lender to our entity, we record the deed, it's now owned by our entity. My partner fixes the place up, sells and we split the profits 50/50.
You asked about getting money from a private/hard lender. So here is my answer, or maybe more of a question since I haven't actually done it this way. Have private money lender give you checks, you buy at auction, title in you or your entity, you immediately complete a note and deed of trust naming lender as payee/beneficiary and give to lender. There are several variables here I have yet to work out, such as, the exact working in the Note (I want 50/50 profits, you may want to pay only interest), when exactly to record deed of trust (if you record deed of trust prior to recording trustee's deed I doubt it would rise to the level of being a lien), do I give trustee's deed, note and deed of trust to my escrow agent and get a lenders title policy thereby insuring the lien and allowing me to possibly sell the note. Clearly there are some land mines in this procedure, not the least of which is trust between lender and borrower, none of them will stop me from trying however.
This is not for the faint of heart or newbie.
The usual disclosures: I'm not a tax pro or legal pro, I'm just a guy.
@chadclanton thanks for the support! Hopefully we'll get an understanding
@kenvelsley thanks for the response...I'll have to contact you when you start to fund deals in GA
Depends on the state. Here in CO you have to hand over the cash right then and there. Some counties give you a short time (an hour or two) to get to the bank and get a check. I've recently been told some also allow wire transfers. So, you lender would need to be right there with you with checks in hand.
Jon Holdman, Flying Phoenix LLC
thanks @Jon Holdman for the info
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