How to secure Private MOney or HML for Auction Properties

Which auction in Ohio, Jodi?

It can be done, what you are talking about.  I sort of set it up.  So what I did to prove the concept - that you can buy for 20% - 50% off the fair market value - was to partner with people.  Small purchases, 20k - 50k.  My team identifies undervalued assets, The client puts up the money and holds deed, and then my team does all boots on the ground and liquidates.  No holding costs. We split the profit 50/50 client did nothing. And I got through a dozen projects like that, all with profit.  Longest deal was 6 months, shortest was three months.  Much, much safer than a fix n flip.  People were actually getting a return on their money and not just paying a loan note every month. Then with the track record, experience, and knowledge of the process I lined up a private money resource that closes on 90% of the deal in return for a fixed rate of return. So now my buying power has increased.

It's not all rose pedals either. There are risks in buying sight unseen and just based off the neighborhood, schools, parking, etc.  You certainly are not bidding on the interior that is for sure.  I've been stuck with a 3k utility lien before, been hit with a 12k underground sewer issue too.  Still never lost money.  My team knows the market very, very well and on my team as well is an agent/investor and a wholesaler with a list of 500+ local investors.  

I mean, if I had real capital, the deals I have seen sitting at auction over the last two years is mind blowing.  But you have to know WHAT you are bidding on. I can't be more clear than that.  You go in there with general knowledge, you will get slaughtered.  You really need block by block knowledge of the market, its amenities, schools, business district, Colleges/Universities, etc.  You have to know it all to win.

A few months ago, I saw a 12 unit building with a commercial space on the bottom go for 77k.  We didn't buy because our lane has been the 1 - 4 unit assets, that's who we sell to.  But wow, my guy told me that it would need about 200k in work.  But after that, maybe 450k value.  The 12 one bedrooms would be 1600 each, and the commercial was 2500.  If you can ge through that project - all the rehab, all the labor, materials, time, money, set-backs, add-ons, permits, zoning.  I can only imagine.  But if you make it through, the mortgage would be about 4500/month, a sell-out is 21,600/month.  I hope to be able to take on projects like this soon.

I see duplexes and triplexes sell all the time for under 60k.  I bought a duplex a few months ago for 26k, sold it for 42.5k immediately.  But that is a winner too on cashflow, especially starting at 26k.

And last month we bought a nice 5/2 house in a C/C+ area for 90k.  We already have a soft offer for 140k.  We won't be able to get in for another month or so.

If you can identify the houses with the built in equity, not so easy to do in an auction format.  Everyone races to look up comps, pics while bidding is going on.  It's easy to make a mistake.  High pressure atmosphere.  And some bidders have very deep pockets, they are just never out on anything so sometimes you have to wait until they win a few and then it loosens up.  Some months heavy bidders are not there and it is more open.  Some months there's 50 - 100 cancellations.  Some months it is mostly foreclosures and the bank is there bidding up to their payoff - which could be high if it is a fairly new asset.  But these are the other great equity spots.  The situation is a fresh foreclosure on something new after like 5 years in the home.  For instance, in 2018 someone pays 240k for a nice 4/2.5 bath house.  They lay down 10% (24k) and finance the 216k.  Fast forward 7 years and the house is getting auctioned off.  There will be a low starting bid, but the bank will be there and bid all the way up to their payoff essentially not letting anyone get it for less than what they are owed.  But once they hit that, they are done.  So if after seven years the house is worth 375k now.  Their payoff is 216k.  So I can get this house for 221k (has to be 5k increments after 100k).  I now have 150k in unrealized equity that is mine.  I saw that situation like 4 - 5 times this year, have not been able to take advantage yet.  It requires bidding 200k, maybe 300k.  Not there yet.  But I see the opportunity.