Won Foreclosure Auction! Now what?

Realtor · Costa Mesa, CA · Member since 2017 · 53 posts · 14 votes

I put my 10% down, and am looking to insure the property while I deal with current owner residents. It is my understanding that this needs to be done asap since I am aquiring it as is where is..

How should I approach the current owner/tenant? They have until October 4th to try and hold on to it. Do I Call, Write a letter, Door Knock?

1. Should I try to lease it to them?

2. Cash for keys?

3. Sheriff Eviction?

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Chad U.

Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes

Quote from @Robert Sorrels:

I did not run title 😬. I shall do that on Monday while I’m looking for insurance. What’s the best way to contact for cash for keys? By mail? Is there a form letter you use? I do feel bad they are losing their home, and want to be sensitive to their situation, (and would like them to not trash the place.) what are the requirements for the cash, do they just have to get the big stuff? Leave whatever they want? Obviously each situation is different…

"I did not run title". Famous last words before realizing one lost all their capital buying a Foreclosure. Checking title before bidding is on the 1st page of Foreclosure Buying 101.

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Account Closed
Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
4y
Are you sure you actually own the property yet, in my state it takes 60 to 90 days for the sheriff to get the deed over to you.
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Robert Sorrels
OP
Realtor · Costa Mesa, CA · Member since 2017 · 53 posts · 14 votes
4y
Quote from @Account Closed:

Are you sure you actually own the property yet, in my state it takes 60 to 90 days for the sheriff to get the deed over to you.

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Robert Sorrels
OP
Realtor · Costa Mesa, CA · Member since 2017 · 53 posts · 14 votes
4y
I definitely do not own it yet.. they still have redemption rights.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
4y
Quote from @Account Closed:

Are you sure you actually own the property yet, in my state it takes 60 to 90 days for the sheriff to get the deed over to you.

One can buy the redemption rights from the folks that lost it.. its just another form of cash for keys.. there are companies that do that they run around buying peoples redemption rights mainly in states where the time for redemption is very long and it ties up the ivnestors so to pay 5k or so for the redemption rights saves them months.. very common in Oregon and Washington for example.
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Robert Sorrels
OP
Realtor · Costa Mesa, CA · Member since 2017 · 53 posts · 14 votes
2y
So.. I was able to get a very detailed title report/ abstract dating all the way back to when the Indians were given title to the land before I paid the remaining 90%. Once the judge signed off and I was on title, I filed a writ of execution, and boy they don’t mess around in OK! I called the sheriff and once they had the writ, he asked me if I wanted him to go out that day! I opted to give them more time and offer cash, and called/messaged them for several days, but got no answers/replies until the Sheriff was at their door.
Long story short, I ended up on a plane a couple days later and met the previous owners.. (long story) we were able to get their belongings into storage and they were able to stay with local family. The house was in really good shape, sans the pool..( about 7k in repairs.) I put in some new flooring and paint, minor electrical, and a couple of ceiling fans (approx 20k in repairs, appliances, travel, and holding)
I put in a new refrigerator, washer and dryer, and leased it myself to a family a few months later (6 months lease) through an insurance company because of their home being a total loss. It is still being rented mo to mo for approx double of local area rent (I’m still paying utilities.)
They may end up purchasing the home with a very large down payment (80%) and I will pay off my Heloc and owner carry the remaining 50k (profit) at around 7% for 5 years interest only, with a balloon. If not I will try to refinance and then either pull the trigger on furnishing the home for STR (cleaners and handymen were hired/ interviewed on the trip out,) and still have the boots on the ground in case of emergency.. or just long term rental and refinance, repeat…
Not a perfect deal, but I learned a ton! I will do a lot differently on the next one, and repeat some stuff too! Happy Investing!
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Mya Toohey
Real Estate Agent · Tampa Florida · Member since 2013 · 630 posts · 303 votes
2y
Depending on Area do STR(short term rental) Check you local, city and state zoning and regulations. As far as getting them out...Cash for keys. IF they are in foreclosure they probably don't have the money to pay rent and won't take care of it. I am a Real Estate Agent in Tampa Florida area and STR and Long Term rentals are the best investment here.
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Zachary Cain Humphrey
Investor · KY · Member since 2022 · 204 posts · 77 votes
2y
Quote from @Robert Sorrels:

So.. I was able to get a very detailed title report/ abstract dating all the way back to when the Indians were given title to the land before I paid the remaining 90%. Once the judge signed off and I was on title, I filed a writ of execution, and boy they don’t mess around in OK! I called the sheriff and once they had the writ, he asked me if I wanted him to go out that day! I opted to give them more time and offer cash, and called/messaged them for several days, but got no answers/replies until the Sheriff was at their door.
Long story short, I ended up on a plane a couple days later and met the previous owners.. (long story) we were able to get their belongings into storage and they were able to stay with local family. The house was in really good shape, sans the pool..( about 7k in repairs.) I put in some new flooring and paint, minor electrical, and a couple of ceiling fans (approx 20k in repairs, appliances, travel, and holding)
I put in a new refrigerator, washer and dryer, and leased it myself to a family a few months later (6 months lease) through an insurance company because of their home being a total loss. It is still being rented mo to mo for approx double of local area rent (I’m still paying utilities.)
They may end up purchasing the home with a very large down payment (80%) and I will pay off my Heloc and owner carry the remaining 50k (profit) at around 7% for 5 years interest only, with a balloon. If not I will try to refinance and then either pull the trigger on furnishing the home for STR (cleaners and handymen were hired/ interviewed on the trip out,) and still have the boots on the ground in case of emergency.. or just long term rental and refinance, repeat…
Not a perfect deal, but I learned a ton! I will do a lot differently on the next one, and repeat some stuff too! Happy Investing!

Sounds like a great deal overall!
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Kerry BairdPro Member
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
2y
@Robert Sorrels, I like the detail you put in about the title report. When we were stationed in England, and bought our houses, we got a thick stack of documents going back to the Norman Invasion of 1066. LOL
1 Reply
Gina SternPro Member
Investor · Boca Raton, FL · Member since 2019 · 1k+ posts · 160 votes
2y
Well done on the update! I think that due diligence when thinking of buying a foreclosure is absolute key! Good luck for further investing in 2024!
[email protected]561-430-2616
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Tanner Miller
Investor · Raleigh North Carolina · Member since 2021 · 10 posts · 5 votes
2y
@Robert Sorrels
How did this turn out for you? Im just reading through this and wanted to see how it came to fruition? Thanks to everyone for the information it was great to see about the redemption period and how that can bite you as well as not doing a title search prior to bidding during auction.
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Jacob Sherman
12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
2y
Hey Robert ! My name is Jacob with Lendbright and would love to answer any questions for you that you may have in the analysis of your project . When is a good time for us to connect and discuss ?
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Robert Sorrels
OP
Realtor · Costa Mesa, CA · Member since 2017 · 53 posts · 14 votes
2y
Quote from @Tanner Miller:

@Robert Sorrels
How did this turn out for you? Im just reading through this and wanted to see how it came to fruition? Thanks to everyone for the information it was great to see about the redemption period and how that can bite you as well as not doing a title search prior to bidding during auction.

0 Reply
Robert Sorrels
OP
Realtor · Costa Mesa, CA · Member since 2017 · 53 posts · 14 votes
2y
Everything has went as well as can be hoped for. The scariest part is opening that door for the first time and finding out what you've just purchased! The whole process is not for the faint of heart, and you must have plenty of reserves just in case need to hold it for a while, have a lot a work to do, or be willing to move on it quickly for a loss.

For myself, I need to be more diligent about getting quality work done ASAP. Not be so worried about the best price on everything, and getting the home on market to rent, or maybe sell. Holding costs will eat away at any potential profit.

Having a pool is something I wanted because I know how they can really make a STR profitable, on the flip side finding dependable people in Oklahoma to repair, and maintain a swimming pool has been challenging. Mostly because of this I waited to list it and then decided to wait about 6 weeks to accept a renter, there's a lot of renters out there with no credit or poor credit.

By the time a lease was signed interest rates went from around 5.5% to 7.5%. Thus I have not refinanced and completed my BRRR..I guess you could say my actual method is more of a BRRRSTRR, Buy, Rehab, Rent, Refi, STR, Repeat! It takes a little longer, but a successful STR will make you more than a LTR but getting a loan on a LTR is easier with better terms, and you can always go back to a mid term or long term if it's not working out as a STR.
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Brendon Clements
Investor · Miami, FL · Member since 2021 · 1 post · 1 vote
2y
Thanks for following up with the end results. I love the way you detailed your experience. I recently won a property at auction and its good to see i'm not alone in my line of thinking. Congrats on a successful deal and more importantly the knowledge gained. Rinse and REPEAT!
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