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

    Thanks for the insight @Scott Schultz

    Couple things I'll point out.  Its not Hard Money, Its private money.  7% annual interest, no points.  Should work out to around $800-$2400 depending on holding time.

    I'm a broker.  Best case senior I find the buyer and only pay title $1100.  Worst case another agent brings the buyer and I pay them 2.4% bringing my total to $5,900.

    If rehab goes to plan I anticipate my numbers to be as follows.

    ARV $200,000

           -$15,000    Rehab

           -$1,600      Financing

           -$5,900     Closing Cost

         -$124,169   Purchase Price

    Leaves me with $53,331 potential profit.  Theres always risk but things would have to go real south to eat up all that.

    Thanks again for the insight!

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

    Thanks for the insight @Scott Schultz

    Couple things I'll point out.  Its not Hard Money, Its private money.  7% annual interest, no points.  Should work out to around $800-$2400 depending on holding time.

    I'm a broker.  Best case senior I find the buyer and only pay title $1100.  Worst case another agent brings the buyer and I pay them 2.4% bringing my total to $5,900.

    If rehab goes to plan I anticipate my numbers to be as follows.

    ARV $200,000

           -$15,000    Rehab

           -$1,600      Financing

           -$5,900     Closing Cost

         -$124,169   Purchase Price

    Leaves me with $53,331 potential profit.  Theres always risk but things would have to go real south to eat up all that.

    Thanks again for the insight!

     is your PM guy requiring an initial title policy, and Property Insurance? and even after 15 flips, I always forget utilities, and my days of property taxes, they all add up. Good Luck

    0Reply
  • Chad U.
    Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
    10y

    I would love a deal that good from auction in south FL, deals like this from auction RARELY exist here!

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

    @Chad U.  nor in Orygun or WA.  not at that price point would expect about a 10% net return on gross sales AT the very best.. so need to do a 500k deal to make 50k.

    Can we say spoiled.. and can we say that others may just wonder up to or down to Racine and check it out.. maybe so.. !!!  :)

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    0Reply
  • Bhekizwe M.
    Bulawayo, Zimbabwe · Member since 2015 · 1k+ posts · 253 votes
    10y

    Congrats on the deal.all the best forward

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

    Update: 

    I took possession of the property on Thursday.  Condition was as I expected, which is awesome.  There were a fair number of holes in the walls and full sheets of drywall missing.  The most surprising part was all the stuff.  There were beds, clothes, the kitchen cabinets were full, toys,  It was as though they just walked out.

    The fun part came on Saturday though when I met the old owner.  It was myself and one other guy there and we were just cleaning up and tossing everything into the garage for when the dumpster was coming on Monday.  All of a sudden a car pulls up to the front of the house (parks on the street facing the wrong way)  jumps out of his car, runs up the lawn and flings the front door open and flies into the house.  Definitely startled me.

    He began by yelling at me to get out of his house.  I told him it was no longer his house and I have the deed and took possession on Thursday.  I was thankful to have another guy there with me, because once he came out of the kitchen and saw there were two of us it calmed him down a bit.

    He knew it was no longer his house because it wasn't too long that he then switched gears and began telling me how he got screwed on the house, first by the bank when he purchased, then the fire (which he started by having the grill to close to the house), which then caused him to get screwed by the insurance company, and finally got screwed by the contractor that did the work post fire which wrapped his "woe is me" story up nicely.  I guess some people are perpetual victims. 

    We ended the conversation by him asking how he was going to get his stuff back.  I told him I didn't know. He then left.

    I called the sheriff and they sent a deputy out.  I explained what happened and pretty much told me I had 2 choices.  1, do nothing and the guy is just out and I through all of it away.  2, schedule a time to let him come in and move his stuff.

    I choose option 2 with come guidelines.  There is so much stuff in the house it would take days to move it all out, which I can't afford to do. I have a dumpster arriving today at 12 with guys to haul everything out.  So I'm allowing him to come in this morning from 9-12 and get the items most important to him. The sheriff will also be present during that time.  

    I called and told him the guideline and he was not happy. Asked me how he was suppose to move everything in 3 hours, I told him he wasn't, it was just to get the important stuff.  Then he cursed me out a bit.  He finished by telling me he was trying to be a nice guys but apparently I'm "all business" which I told him was accurate, this is a business for me and everyday I own this house I have expenses, I can't put the project on hold for 3 days while he moves his stuff. Especially since its been vacant since July 2015 and he knew this day was coming.

    The very last thing he asked me was if the sheriff will be there, I said yes and he hung up.  Needless to say the sheriff will for sure be there.

    If its as much of an adventure today as it was Saturday, I'll do another update.  Wish me luck!

    1Reply
  • Nick L.
    Buy & Hold Investor · Milwaukee, WI · Member since 2012 · 378 posts · 179 votes
    10y

    @Sam EricksonGreat story and thanks for the update! You definitely got a leg up by knowing the property well. Sometimes I browse Racine Co foreclosures but since I'm not a local and it's a tepid market, it's hard to tell the champions from the nags.

    I am not so sure about your self-help eviction strategy. You said the former owner had moved out in July 2015 but I would think he'd have an argument for claiming he still occupied the property if his stuff was in it.

     In WI if you get the deed for a property that is still occupied by the former owner, you need to go through an eviction process. You can speed this up by having the plaintiff file a writ of assistance at the confirmation hearing. http://www.nolo.com/legal-encyclopedia/wisconsin-f...

    It's definitely good that the sheriff's deputy supported you. I personally would still want to go through the correct process though, just to cover my ***.

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

    @Nick L.I would agree with you about going through the eviction process.  However this situation was the exception.  The property had no running water, and the gas was capped at the meter so no heat.  It was clearly uninhabitable and the stuff was abandoned.

    1Reply
  • Nick L.
    Buy & Hold Investor · Milwaukee, WI · Member since 2012 · 378 posts · 179 votes
    10y

    @Sam EricksonLooks like you were right on the money! Another win for you. This is shaping up to be a great project for you.

    0Reply
  • Cody Barrett
    Phoenix, AZ · Member since 2015 · 345 posts · 138 votes
    10y

    Wow! That is pretty intense.  Good luck for sure @Sam EricksonKind of interesting because this reminds me of a story on here by an investor named Will here on BP about something kind of similar.  He purchased a home and I think squatters tried saying it was their home.  5 years later he finally won in the courts and can flip the house.  California laws really gave him hell.  Sounds like this guy knows he can't do much and will leave you alone which is nice.  Good luck and hope the return is high! 

    Cody 

    0Reply
  • Tomi Stoya
    Eau Claire, WI · Member since 2016 · 8 posts · 0 votes
    10y

    Sam,

    Was $116,927.83 only the balance on the mortgage or the judgement amount? The judgement amount should include past due payments, interest and taxes I believe?

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

    @Tomi Stoya $116,927.83 included back taxes, interest, etc. However that was the balance at the time of filing.  The day of the auction the opening bid amount was the $124,xxx.  this was for the additional interest, taxes, etc. incurred during the period of filing the foreclosure and the auction.

    Since I'm here I'll provide an update  

    Rehab went according to plan nothing major, however after getting in we did decided to finish a portion of the basement brining our rehab cost up, we are at $25,000 now.  We are listed for sale but no accepted offers yet, so I don't have final numbers.  Its definitely taking longer to sell then I had thought, I'm finding out the buyer pool in Union Grove, is much smaller then I'm used to in Milwaukee.  Holding costs are obviously going to be higher, Currently listed at $209,900 with a break even around $160,000.  So Still have good margins.  Once we get it under contract I'll provide another update.

    1Reply
  • Adam Aero
    Member since 2022 · 11 posts · 4 votes
    3y
    Quote from @Sam Erickson:

    Below are my anticipated numbers:

    ARV: $200,000

    Purchase: $124,168

    Rehab: $15,000

    What became the actual rehab cost and sale price?


    1Reply
  • Tom O.
    Chicago · Member since 2018 · 214 posts · 165 votes
    3y

    Wow, cool. When is the next sale? 

    0Reply
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