Learn How to Purchase Foreclosure Auction Properties and Use Private Money
Investors are finding a large number of discounted properties at foreclosure auction sales. The main problem with foreclosure auction sales is you need all cash most of the time to purchase the property.
How to Find Foreclosure Auctions
Most properties that are being auctioned are advertised in the newspaper in the county where the property is being sold and at the courthouse steps you can find a notice which gives you the date, time and property information. You can also check at the local county recorder’s office for notice of sales or notices of defaults depending on which state you live in. Some foreclosure actions are judicial, which need court approval, and others are non-judicial conducted by a trustee and do not need court approval.
What to Know About Foreclosure Auctions
The highest bidder normally gets the property. However, sometimes the properties do not sell because the lender is sets a high minimum bid because they want to recover a good portion of the mortgage balance that is owed by the borrower.
If the properties do not sell, the bank buys them back and they become REO (bank owned properties). You can then buy REO properties at a discount from the bank and still rehab and flip them. If you are going to flip them, then you should consider getting a private money loan.
Certain states allow the borrower to redeem the property after the sale. This could mean that you have no legal interest or ownership in the property, and you are out of pocket all the costs so investigate your state rules first. Any doubts, check with an attorney.
Finance Your Foreclosure Property with Hard Money Lenders
This is where your source of private money lenders comes in handy. Having cash ready fast is crucial to being able to purchase a foreclosure auction property. Private money lenders can close transactions quickly. Especially if you are planning on flipping the property, it makes sense to get a short term loan from a private money lender as opposed to going to the bank or other traditional financial institution.
The private money lender is looking at the property as the collateral and not your credit so it’s easier to get financing quicker from a hard money lender. If you are planning on keeping your foreclosure auction property for awhile, then I suggest you go with a traditional lending institution.
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Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Private Lending Kit.
