Successful Sheriffs Sale (Was the only guy there!)

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Successful Sheriffs Sale (Was the only guy there!)

Sam Erickson
Real Estate Broker · Milwaukee, WI · Member since 2014 · 338 posts · 129 votes

I successfully won the auction for a property that went to Sheriffs Sale in Racine County.  The outstanding balance was $116,900, however the open bid was $124,167.  This caught me a little by surprise.  I had watched some in the past and most of them the opening bid was the amount on the notice of foreclosure.  I asked the sheriff way this one was more and all he could tell me is thats the number the bank set.

In the end it all worked out though.  My max purchase price was $125,000.  Since I was the only guy there I was able to buy the property for $1 above the opening bid, so $124,168.

Its going to take anywhere from 5-10 business days for the court to confirm the sale. Once that happens I have 10 days to bring the remaining 90% owed to the court.

I'm very excited to get started on the rehab.  The property is located in Union Grove WI (town I grew up in).  I was very familiar with the property and believe I knew some information that no one else did.  The property actually caught on fire 2 years ago and was completely redone with insurance money.  I also was able to catch the banks maintenance guy that was there and look through the front door.  I'm anticipating $15,000 rehab, like I said everything was redone 2 years ago.

Below are my anticipated numbers:

ARV: $200,000

Purchase: $124,168

Rehab: $15,000

I'm right at 70% of ARV which I'm happy with. I do have the risk that the rehab will go high but knowing what I know and what I saw I'm optimistic that I can keep it at $15,000.

Hopefully I'll be writing another success story for the actual flip in the near future.

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Brad Gibson
Investor · Surprise, AZ · Member since 2014 · 46 posts · 15 votes
10y

How happy I would be to walk up to a sheriffs sale and be the only guy there! I am currently 0-4 bidding on sheriffs sales. This gives me some hope. Congrats..sounds like a great deal!

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  • Seth Carlone-Hanson
    Investor · North/ Central, FL · Member since 2015 · 47 posts · 11 votes
    10y

    Great job. So you only had to bring 10% of the purchase in cash to the Sherrif's sale?

    0Reply
  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    10y

    @Sam Erickson, do the numbers work to keep it as a rental (so you can refi later to continue BRRRR), or do you intend to relist it for ARV after rehab?

    Congrats on the deal. But, how will you optimize your capital now?

    0Reply
  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Sam Erickson Congrats!  Sounds like a great opportunity.

    0Reply
  • Sam Erickson
    OP
    Real Estate Broker · Milwaukee, WI · Member since 2014 · 338 posts · 129 votes
    10y

    thanks @Seth Carlone-Hanson and yes Racine county requires 10% down in cash or certified funds.  So since our top was 125,000 we brought a cashiers check for 12,500.  Since it didn't go for $125,000 we put a little more then 10% down.

    Thanks @Jason Bott

    @Brent Coombs we will sell for the ARV. Two reason I have a private lender that in addition to his % return I also give him a small share of the profits. Second is I think I can do better return wise else where. I'll be all in around 140,000, rental market in UG for this size house is 1200-1300 a month. I could go to Weat Allis WI and for 120,000 get a duplex that grosses $1600-$1700.

    2Reply
  • Don Colagrossi
    Real Estate Agent · Elmhurst, IL · Member since 2016 · 153 posts · 36 votes
    10y

    Sam,

    Any other fees due at the Racine County Sherriffs Sale?  Never did one before. 

    Thanks, 

    Don Colagrossi,  Burlington, WI 

    0Reply
  • Sam Erickson
    OP
    Real Estate Broker · Milwaukee, WI · Member since 2014 · 338 posts · 129 votes
    10y

    @Don Colagrossi No other fees due to Racine county.  You are responsible for any unpaid taxes, or lines, special assessment, etc.  Not really fees but could increase the investment amount.  For example this property hasn't had the 2015 taxes paid yet, so I'll pay those.  You can find that all out before the auction though, just have to make sure you can work that cost into your numbers.

    I use private lenders for some of my purchases. So our title company will put together the mortgage note and will file the lien, do title, etc.  I think all that costs around $300. 

    If you had all the funds yourself necessary to by then there would be no fees.

    1Reply
  • Don Colagrossi
    Real Estate Agent · Elmhurst, IL · Member since 2016 · 153 posts · 36 votes
    10y
    Originally posted by @Sam Erickson:

    @Don Colagrossi No other fees due to Racine county.  You are responsible for any unpaid taxes, or lines, special assessment, etc.  Not really fees but could increase the investment amount.  For example this property hasn't had the 2015 taxes paid yet, so I'll pay those.  You can find that all out before the auction though, just have to make sure you can work that cost into your numbers.

    I use private lenders for some of my purchases. So our title company will put together the mortgage note and will file the lien, do title, etc.  I think all that costs around $300. 

    If you had all the funds yourself necessary to by then there would be no fees.

    0Reply
  • Don Colagrossi
    Real Estate Agent · Elmhurst, IL · Member since 2016 · 153 posts · 36 votes
    10y

    Thanks Sam for the info.   Your information has been very helpful. Talk to you soon. 

    Don Colagrossi 

    0Reply
  • Sam Erickson
    OP
    Real Estate Broker · Milwaukee, WI · Member since 2014 · 338 posts · 129 votes
    10y

    UPDATE:

    So I received some additional paperwork from the lawyer who is responsible for this sale.  It got way more detailed about the numbers.

    @Don Colagrossi I did in fact pay fees, just didn't know it.

    As I said in my original post the outstanding balance was $116,927.83 however the open bid was $124,168.78.  Below is the reason for this.

    $150.00  This was a "Sale Fee"

    $167.15  This was the cost of Publication of the sale

    $100.00  Brokers Price Opinion

    $3,199.87  Additional mortgage interest from the time of the filing (July 2015) till the sale     (Feb 2016)

    $3,623.93  2015 RE Taxes.  Was actually happy to see this, I thought I was going to have to come out of pocket for this.

    Add all those up along with the original mortgage balance of $116,927.83 and you get a total of $124,168.78 which is what I paid.

    3Reply
  • Alexander Ball
    Ann Arbor, MI · Member since 2008 · 90 posts · 20 votes
    10y
    What did you do to ensure there wasn't a second or third mortgage on the house, Or other liens? Did you ask the title company to do that? How does that work?
    1Reply
  • Christine T.
    Investor · Palm Harbor, FL · Member since 2015 · 86 posts · 18 votes
    10y

    Interesting there was no competition.  Congratulations!

    0Reply
  • Sam Erickson
    OP
    Real Estate Broker · Milwaukee, WI · Member since 2014 · 338 posts · 129 votes
    10y

    @Alexander Ball I called the county and did a lien search.  I suppose you could have a title company do the search for you if you wanted.

    @Christine T. I wasn't totally surprised that I was the only one bidding on this property but I was surprised that there was no one there for the other properties.  The property I purchased is in Union Grove, about 4,500 population.  Deals don't happen there often.  I've been actively investing for 8 years, keeping tabs on that market the whole time and this is the first deal I've bought there.  I am hoping that I gain some momentum there though and I can start doing more.

    0Reply
  • Federico Gutierrez
    Realtor · Cleveland, OH · Member since 2015 · 2k+ posts · 857 votes
    10y

    How did you calculate the rehab costs?

    Were you able to gain access to the property prior to the auction?

    0Reply
  • Frank Eimiller
    Rental Property Investor · Fond Du Lac, WI · Member since 2015 · 261 posts · 78 votes
    10y

    Man this is awesome! Congratulations 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Sam Erickson  nice work little under radar bergs are nice place's to do this.

    also really nice that you can bid with only 10% up front.. we have to have 100% in cashiers check at time of auction... even with that there will be millions of dollars of checks chasing a few deals at each auction...

    in this market if I was the only bidder it would scare the bee gee's out of me I would wonder what the heck I missed.. I have seen people buy seconds many time's thinking they were the only bidders.. even after some folks told them what they were doing. they still did it.. and once you hand over your check its gone no second chances you lose your money.

    good luck with this one..

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    0Reply
  • Sam Erickson
    OP
    Real Estate Broker · Milwaukee, WI · Member since 2014 · 338 posts · 129 votes
    10y

    @Federico Gutierrez I was not able to enter the property prior to the auction. I was able to peak through a couple windows. I was also fortunate enough to time driving by one day when the bank's maintenance guy was there and I was able to pick his brain (side note: don't be afraid to talk to people). My rehab number was based on the history I knew with the property, what I saw through the couple windows, and my conversation with the Maintenance guy. In the end its my best educated guess. I think I have enough room with my ARV that I can afford to be off a good amount and still come out ok.

    Thanks @Frank Eimiller

    Thanks for the kind words @Jay Hinrichs .  After the auction I spoke with the sheriff a bit and I guess in Racine county they only sell 3-4 properties to 3rd party bidders a month. This surprised me, Racine isn't as large as Milwaukee but its still a decent size market.  I'm hopeful this one goes according to plan and I can take advantage of some more sheriffs sales.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Sam Erickson  well then I would not be talking about this on BP you want to keep this in your back pocket.. next thing you know 10 investors reading BP will be there competing against you... :)   nothing like creating your own competition... !!!

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  • Sam Erickson
    OP
    Real Estate Broker · Milwaukee, WI · Member since 2014 · 338 posts · 129 votes
    10y

    @Jay Hinrichs right!! what was I thinking.  Need to start spelling things wrong two like "milwauky" to avoid the keyword alerts!

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Sam Erickson  I know it goes against the BP grain.. but when your in a market that has so few 3P sales the last thing is letting people know about it.. next thing you know some money bags shows up and starts buying every deal and you never get another one..

    this happened to many of us in Atlanta.. and of course I was a carpet bagger from Orygun.. but I was buying 3 to 6 a month in Atlanta for our portfolio the next thing Blackstone and other hedges show up and bid everything up and we were put out of business as fast as we started I think I got to partake for about 6 months.. ended up buy 54 homes. when If the competition had stayed low key and local I would still be at it.. Now since my relatives are all from Brookfield I think I will just snoop around your way... !!!

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    0Reply
  • Brad Gibson
    Investor · Surprise, AZ · Member since 2014 · 46 posts · 15 votes
    10y

    How happy I would be to walk up to a sheriffs sale and be the only guy there! I am currently 0-4 bidding on sheriffs sales. This gives me some hope. Congrats..sounds like a great deal!

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Brad Gibson  yup your right.. has no clue how lucky he is  LOL>

    in our market if you put that up for sherrifs sale there would have been 20 to 30 bidders easy... if you auctions that only required 10% deposits I shudder to think how competitive it would get... you would have many home owners paying full retail as they would have the time to put bridge financing together.

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    0Reply
  • Glenn Banks
    Design | Build · Milwaukee, WI · Member since 2014 · 107 posts · 35 votes
    10y
    Great job Sam. My aunt lived in Union Grove for a time in the late 90's. The town is trying to do some major developments in the downtown area , so they are trying to position the town for growth. Again great job.
    0Reply
  • Sam Erickson
    OP
    Real Estate Broker · Milwaukee, WI · Member since 2014 · 338 posts · 129 votes
    10y

    Thanks @Brad Gibson

    Thanks @Glenn Banks

    Hopefully I'll be posting another success story after the flip is complete!

    0Reply
  • Scott Schultz
    Rental Property Investor · West Bend, WI · Member since 2015 · 931 posts · 598 votes
    10y
    Originally posted by @Jay Hinrichs:

    @Sam Erickson  well then I would not be talking about this on BP you want to keep this in your back pocket.. next thing you know 10 investors reading BP will be there competing against you... :)   nothing like creating your own competition... !!!

    thats exactly why I only read these and never give my secrets, Id love to share, but i dont want to be out bid by someone that read my post I will always help where i can if it doesnt jeopardize my ROI. my back pocket has a lock on it.

    0Reply
  • Scott Schultz
    Rental Property Investor · West Bend, WI · Member since 2015 · 931 posts · 598 votes
    10y
    Originally posted by @Sam Erickson:

    I successfully won the auction for a property that went to Sheriffs Sale in Racine County.  The outstanding balance was $116,900, however the open bid was $124,167.  This caught me a little by surprise.  I had watched some in the past and most of them the opening bid was the amount on the notice of foreclosure.  I asked the sheriff way this one was more and all he could tell me is thats the number the bank set.

    In the end it all worked out though.  My max purchase price was $125,000.  Since I was the only guy there I was able to buy the property for $1 above the opening bid, so $124,168.

    Its going to take anywhere from 5-10 business days for the court to confirm the sale. Once that happens I have 10 days to bring the remaining 90% owed to the court.

    I'm very excited to get started on the rehab.  The property is located in Union Grove WI (town I grew up in).  I was very familiar with the property and believe I knew some information that no one else did.  The property actually caught on fire 2 years ago and was completely redone with insurance money.  I also was able to catch the banks maintenance guy that was there and look through the front door.  I'm anticipating $15,000 rehab, like I said everything was redone 2 years ago.

    Below are my anticipated numbers:

    ARV: $200,000

    Purchase: $124,168

    Rehab: $15,000

    I'm right at 70% of ARV which I'm happy with. I do have the risk that the rehab will go high but knowing what I know and what I saw I'm optimistic that I can keep it at $15,000.

    Hopefully I'll be writing another success story for the actual flip in the near future.

    you should do well on this one if there are no unforeseen issues, I buy regularly at Sheriff Sales, the reason you had no competition, is the spread was not wide enough for most investors sight unseen, if I cant get in, I have to get it for 50% of ARV ore more depending on that ARV, based on your numbers, you dont have a lot of room for error, especially using hard money, 200k-15k= 185k- Commission and title 113k=172k- holding and finance costs 6k=166K- 124k=44k now if you get in the basement and the furnace is bad, or gone, and you have a bulging basement wall, and have to tear out landscaping or driveway to fix it, your almost sunk. Im only pointing out the possibilities with site unseen. here is an example, go to Hubzu and look at the house in Kewaskum WI 168 Washington Ave, you would never know, its gutted to the studs, and everything is infested with mold. or I have seen basements with water to the top of th basement stairs, froze solid, and they look fine through the windows. Im not trying to scare you, just prepare you. it will probably be a great deal, and all work out, just be aware.

    1Reply
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