On to the next property...

[AIR]

As I am finishing my first property (last minute touches/screening tenants). I feel as though I am ready to start looking. My plan is to first figure out my financing. I want to be able to close easily and hassle free. Tomorrow I have a phone meeting with a broker, I am going to discuss different financing options (conventional, rental, foreclosure, flip) Since I am not 100% sure which direction I will be going. I am most likely going to be looking for something that will require some renovation, rehab and rent. I am also looking at some sheriff sales but STILL don't feel comfortable with them yet. It also seems nobody on this board has experience with them. I have a million questions I need to ask about sheriff sales. So where do you think I should go with my next property. I have a good amount of equity from my first property that I can use. This is why I think a sheriff sale would be a great opportunity, since I know have the cash to play with.

[Randy (SELA)]

Last rehab I did was a sheriff sale property. Thing I hate about sheriff's sales is you always wind up bidding against the lawyer representing the bank, who won't let the property go for much less than FMV. Doesn't matter how much is owed on it. Once in a while a property will go cheap, but it's not too often. At least in my area anyway.

[AIR]

Randy,

could you explain the process you went through before buying the property. I am very interested to hear

[Randy (SELA)]

I'm far from an expert but this is how it works in my parish/county. Sheriff's Sale notices appear in our local paper. If I see a property I'm interested in, I check the history of the property and the owner thru online tax records. I want to make sure there isn't a large lien against the property or the owner, from the IRS for example. If I were buying higher-end properties, I would probably pay for a title search if there was enough time. I also research comparables in the area to know what I can sell the house for fast. I'm not worried about what the house will appraise for, I want to know what I can sell it for as quickly as possible. At the courthouse you will need a letter or statement from your bank stating you are authorized to purchase up to $X amount. The auctioneer wants to see this before she will let you bid. The auction happens in the courthouse lobby, and there are usually only 5-10 attendees. If you are the high bidder, after the auction you are required to pay right then and there via check, certified check, or money order. After a few weeks you receive the deed to the property in the mail. As I probably mentioned before, 9 times out of 10 you will be bidding against the legal rep for the bank and he will not let the property go too cheap. The property I bought was foreclosed on for $12k I believe, and the lawyer bid us up to $20k. Another property I've been watching went to Sheriff's Sale and the bid went up to the $30's, but it went back to the bank. They listed this house about 6 months ago for $49k. When the price dropped to $29k last month, I put in an offer of $12.5k. The response was that I would have to increase my offer substantially. Well guess what? The listing price is now $19.5k and I just put in an offer of $15k. We'll see what happens

[AIR]

what type of financing do you use? You said you need a letter from your bank stating they will lend...but you need to pay right then and there??? How does that work? Does the bank give you a blank check, if so when do you start paying interest on this loan. How does financing for sheriff sale foreclosures differ from conventional financing?
Also how do you find the tax records online? Is it free? Does this work for any state?

I tend to find TOO MANY deals when looking in only one county. How are you able to slim the search down. I also find that alot of properties become stayed and don't go to auction. Also sometimes properties that were not listed online or in the local paper are up for sale at the day of the auction. Is there a way to find out about these properties.

[Randy (SELA)]

It's not a letter stating how much they will lend, it's how much cash you have access to right now. I have a line of credit from the equity on a couple of SFH's. If I luck out and buy a property at sheriff's sale I stop at the bank afterwards and have them deposit the funds in my account so the check will be good. If I intend to sell the property I will use the line of credit for purchase and rehab. The payments usually start the following month. If I'm going to keep it I will go ahead and finance it with a rehab loan.
Access to tax records online costs us about $20/year for my parish/county. Your clerk of court's office should have that info. Also, a lot of properties will be cancelled at the last minute, on the day of the sale. I have been to auction several times and had that happen. The best thing to do is attend your local sheriff's sale to see how it works. Try to locate someone who has bought a property at the sale, they should be able to tell you how it works for your area.

[Randy (SELA)]

An update on the repo I've been watching. Bid $15k and got a counter-offer of $17k. But they needed an answer before 12 midnite yesterday or it was going to auction. The house looks ok from the outside, but inside floors are caving in so they will need to be completely ripped up, reinforced, and re-done. Well, I informed him that the house would need $25-30k of repairs at minimum and $15k was as high as I would go. Of course, they rejected my offer, so here is the link to the auction:

http://www.realtybid.com/bidpage/bidpage.cfm?item_id=534683&AP=0&AB=0

I'll probably bid up to $10k to get it cheaper than the $15k I offered just for the heck of it. Fun, fun, fun!

[haynesm]

Randy, AIR
Randy. It seems like you are doing about right for your needs in the offering department. Don’t let the bank or any other company buffalo you into making higher offers than what you like to play with. My example: Property was listed as for 32k, didn’t sell for some time, they dropped price to 29k, still didn’t sell, they dropped it some more. When it got down to 19k I went to a real estate company and told them I wanted to make an offer on the property. They smiled from ear to ear until I told them I was offering 9k. Of course the real estate company had to put in all offers. Company came back with a counter offer of 14k. Yes, here’s my money I said. Somehow, what they didn’t realize or didn’t care about was that the property had 5 acres of land that went it. Real estate agent told me if he had known property had 5 acres he would have bought it. I rented it as is to a guy who was interested in buying the property. He lived there about 5 months until winter came along. He built a fire in the fireplace, unbeknowanced to me, caught the house on fire - total loss insurance wise. did I do good or what. Pruchase price 14k, banked loaned me 16k to start out with to give me some rehab money, burned down and insurance paid me 26k. And I still have the 5 acres of land.

AIR. Follow Randy’s suggestions, make your own low ball offers to lending companies and have FUN. You don’t gotta get rich today. Tomorrow will be soon enough.
Sheriff sales are a different ball game. We don’t have many of them around here. I, like you would be interested in learning more about them. I’m just gonna call the sheriff up, tell him I want to come visit with him and see what he can or will tell me. What’s that say about getting it straight from the mule’s mouth?

[AIR]

getting my paperwork together to finalize financing...