Foreclosure funding

6 Replies

So, I'm a newbie/want to be invest and have been doing a lot of research but still confused about how to get started and take that first leap. 

Here is my plan, I would like to start out in a few low balance flips, with limited rehab, and feel the greatest opportunity for the biggest return is through foreclosure auctions. Once I have completed the purchase and flipped the property, I would like to roll the earnings into my next flip, until I have earned enough capital to purchase homes in higher growth, high rental areas to hold and rent. 

I feel that I have a good enough just understanding and knowledge to succeed in finding a good deal. However, my dilemma or area of insecurity is knowing how to arrange funding, or locate a parter prior to action. 

I've checked out the market place which seems like a good starting point, but understandably so, most of the suggestions are to locate the deal first. The problem is most of the houses I'm looking at would be cash purchases, and you are required to have verified funds at the time of the auction. 

Please help educate me on what I'm missing. 

Additional question, about foreclosure feasibility. So, I was looking through a few recent foreclosure sales locally and found a house down the street from me with a market value of $145K, and the default was for $113k, and reportedly was purchased back by the bank, and then sold to an investor for $500. The home was immediately placed back on the market by the investor for $145K. Does this sound feasible, or is it likely the reported sale figures are not accurate. 

Thanks in advance.  

@David Brodeur  

  500 dollars at foreclosure sale then placed on market fo 150k I suspect something is missing here.. Not to say some incredible deals do not happen but they are far and few between.

when you say foreclosure auctions are you talking true court house steps or a company like Auction. com?

I think AL has a 1 year right of redemtion

Originally posted by @Jay Hinrichs :

@David Brodeur  

  500 dollars at foreclosure sale then placed on market fo 150k I suspect something is missing here.. Not to say some incredible deals do not happen but they are far and few between.

when you say foreclosure auctions are you talking true court house steps or a company like Auction. com?

I think AL has a 1 year right of redemtion

 Yes, I'm interested in court house action bids. You are correct on the right of redemtion period. While I already knew that, it was obviously something I had not accounted for. I'm glad I asked, so ultimately I would end up having to hold the property if I went this route, which eliminates that as a realistic opinion. 

@David Brodeur  

as a follow up its cash intense you need the cash to bid.. HML won't give you a loan until they can get title insurance this what usually seperates the players for those that want to do it. If you have cash then go for it. if you have no cash then its a waste of time.

If you do bid just make sure you know lien position etc

I have a novice working knowledge, of how some of the local actions work, but I'm still learning on the go. Most of my prior knowledge comes from working closely with REO's with the company I used to work for. I was a collections manager and was responsible for ordering BPOs, NODs, and approving the foreclosures after the NOD period had expired. Ironically, I was recently laid off due to a regional cutback and would prefer to take this opportunity to get into investing before deciding to go back into a corporate job.

I agree with @Jay Hinrichs  : bidding at foreclosure auctions is  very competitive and you need CASH. If you don't have that, you're OUT of the game. Foreclosure auctions is also risky and I don't recommend it for newbies.

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