My failure at the Milwaukee County Sheriff's Sale
Just thought I'd share my experiences at the Milwaukee county sheriff's sale today.
I found a specific property I wanted in the Daily Reporter (newspaper of legal record) a few weeks ago. Right in my sweet spot neighborhood. Tracked it through to today's sale. I was so excited when the attorney released the bid amount on Friday at way lower than I would have thought! $43k bid with assessed value at $160k.
On Friday afternoon and over the weekend I did all my due diligence (visible condition, title letter, city violations, outstanding utilities) and everything is pretty clean. I even called a city inspector who had been through the house and got an idea of internal condition. So I turned up at the county courthouse this morning with cashier's check and extra cash in hand to go up to $5k over asking.
I've been to the auction before and know that most properties go straight back to the plaintiff without a 3rd party bid. The last time I was there in about 2010 I was unprepared and didn't understand the system yet. A house came up in my street which was at least $100k under FMV but I hadn't done any due diligence or brought any money. If I had been prepared I could have walked away with a steal.
So I sit there today for over an hour while property after property slides by with no interest. A couple of minor spats between rivals in the same patch but nothing too exciting. Rivals glare at each other and attorneys look like they're dozing off.
Suddenly my property comes up. The plaintiff bids $43k. I bid $10 over and there's silence for a moment. Could I have won it??? Then another guy bids $50k straight off. Someone else comes in. 5 or 6 people drop in and out of the bidding until it gets to $77k!!! I was so pissed!!
Maybe I was too ambitious by expecting to get a solid property in a solid area for $100k below assessment with no competition... but man, I am going to have to up my game!
I guess the lesson to take away from this is that there is more capital and more competition than there used to be. You have to have a specific angle on a property or be willing to put up with title or condition problems that nobody else is... or compete with cash-rich guys who buy these things all day.
At least I didn't overpay, or even worse, fail to do due diligence and end up with a broken foundation and a jumbo IRS lien!
@Joel Owens "He used to get 25k margins on the starter houses to flip but now the margins have gone down to 5k or 10k a house so he doesn't bother with those anymore. Some investors will take a very small yield and make it up on volume." - This resonated so much with me so thank you for the experienced contribution to this thread.
We're in the same position on our current remodel. I can't justify a $10-15K profit (before taxes). That's not worth 4 months of rehab, hiring contractors, and swing hammers.