How do you fund online Auctions?

Question

Hi

I spoke to some HM lenders and most don't want to lend for auctions. I have an interest in buying auctions remotely (I am based in NJ) in another state. How are people funding auctions? I already know about HELOC but I cannot do that at the moment.

Mike Klarman · Answer

Private Money relationship, Lines Of Credit, Business Loan perhaps.  I buy at auction using a mix of my funds and a Private Lender.  It's not cheap so you need to know your exit strategy and be good at executing it.  I've bought about 10 properties at auction in last 12 months.  Some with my money, some I consulted a client to purchase and share in the profit, and then some with a private lender who receives a stated return on the capital per month.

What state are you looking in?

Jimmy Lieu · Answer

Hi Annwar, welcome to BP. A lot of auction buyers are using cash, private lenders, hard money lenders that specifically allow auction purchases, partnerships, or lines of credit. The challenge with auctions is the short closing timeline, so many traditional lenders and even some hard money lenders can't move fast enough or want a property inspection before funding. One strategy I've seen work well is buying with cash or private funds first and then refinancing into longer-term financing after closing and any needed repairs are completed. Since you're buying remotely, I'd be extra careful with your due diligence because auction properties can come with title issues, occupancy concerns, deferred maintenance, or other surprises that are harder to evaluate from another state. If you're planning to pursue this regularly, it may be worth building relationships with local lenders and investors in your target market since they often know funding sources that are comfortable with auction deals and quick closings. Good luck with your search and first auction purchase!