| Last week I went to the monthly foreclosure sale at | | | | he wouldn't pay any more than $120,000 for it. The |
| the courthouse steps. It was my first time attending a | | | | property went for about $122,000 to one of the |
| foreclosure sale and these were my observations. | | | | investors whom was purchasing it to owner finance |
| When I first arrived, the sheriff was standing higher up | | | | out. This investor purchased one other property at the |
| on a bench and there were about 20-30 people | | | | auction spending a bit over $200,000 within a two hour |
| around him. An assistant passed out a handout of the | | | | time frame all in cash (or cashier's checks to be |
| properties that were up for auction. You are to arrive | | | | exact). The two properties he bought were probably |
| with cashier's checks or money orders on hand to | | | | appraised at over $300,000 combined making it a |
| purchase the properties on the spot and be given the | | | | really good shopping day. |
| title. There were 14-15 properties on the list with 2-3 of | | | | Several investors I spoke with were there to purchase |
| them being struck out and the rest available. As the | | | | properties to use as rentals, some to outright turn |
| bidding began there was a common theme that began | | | | around and sell, and others to owner -finance out. A |
| to arise. There were many spectators and those | | | | very good strategy during this time that homeowners |
| wishing to bid and then there were those that actually | | | | can't get conventional loans. One conversation I had |
| had the cash to buy. It was easy to note whom were | | | | with some of the investors is how long gone were the |
| the investors in the crowd. Most of them stood | | | | days that you could purchase several houses for |
| together as they all knew each other and had | | | | $30-50k a piece and now you were lucky to see one |
| pre-printed lists that they had brought with them of the | | | | or two houses on the list for $100,000. I explained that |
| properties with comps, maps, and details. They didn't | | | | most likely this was happening to due to investors |
| bid on any of the properties in this case all acred lots | | | | choosing to contact the property owners during the |
| that were up for grabs at $1500 each but instead | | | | pre-foreclosure stage and getting the deals then |
| waited to bid on actual houses. A certain man did pick | | | | instead of waiting to arrive at the courthouse steps. |
| up about 5- 7 lots all within the same subdivision. This | | | | Many of the investors did not bid for the simple reason |
| man was an interesting figure. He was a lean, hispanic | | | | of not seeing a good deal in their price range and did |
| man whom seemed to be in his late 30's-early 40's. He | | | | not have the capital to purchase the good buys that |
| wore a soiled mechanic's jumper suit and had various | | | | were available. Many of the normal folks in the crowd |
| tattoos and looked a bit scruffy. He didn't seem the | | | | were there to buy a property for themselves and |
| kind of person whom would have the cash to buy | | | | soon realized that they needed to come ready to play |
| these properties all at once yet he did. The investors in | | | | with the big boys if they wanted to take a title home. |
| the crowd mentioned that he was probably buying to | | | | Several things to consider if you want to attempt to |
| build small houses on the land to sell or rent out. I didn't | | | | purchase a foreclosure at the courthouse steps to use |
| ask. There was one property or piece of land that did | | | | as an investment property.. |
| gain interest from the public and the bidding started a | | | | 1. Be educated. Learn as much as possible about the |
| bit higher at $2500. It ended up going for about $5000 | | | | process and the property you want to bid on. There |
| for that piece of land to a couple in the crowd. | | | | are several services in your area that will do all the |
| After the sherrif's auction ended, many people left and | | | | background research for you and sell you a list of the |
| a lady arrived from an attorney's office with several | | | | properties that will be auctioned each month. |
| houses for sale. Those houses went fast and were | | | | 2. Calculate your costs involved with purchasing the |
| bought up mainly from the investors whom quickly | | | | property. What will it cost to fix it, back taxes, any liens |
| outbidded the normal folks in the crowd. These houses | | | | that you need to pay off, etc.. Figure this in to your |
| were also on the handouts they had brought with | | | | bidding cap and have a high number you will stop at |
| them and they knew which ones they were going to | | | | before it's not a good deal for you. |
| buy. A bit of a rivalry outbidding war ensued from time | | | | 3. Be ready to play. You will need to have all the |
| to time within the investors as they poked at each | | | | money upfront to purchase there on the spot. It will |
| other when they saw that the other one wanted that | | | | need to be in the form of money orders or cashier's |
| property so they would bid to make the price go | | | | checks. If you personally don't have these kinds of |
| higher while a different investor would jump in to see if | | | | funds, that's when you can use other people's money |
| he could get in on the action. They all had their limits | | | | to invest with through forming trusts, rolling their 401(k)'s |
| depending on the beginning price of the property, costs | | | | into self- directed IRA's, etc.. Find investors whom have |
| to fix it up and the profit they were looking to make. | | | | the cash but don't necessarily want to do the work. |
| One particular property that really got alot of attention | | | | 4. Have your exit strategies in place when buying your |
| was positioned in an up and coming area of town, | | | | property. What investing strategy will you use? Is this a |
| looked really good (they already had a picture of it in | | | | good rental property, resale, owner-finance, lease to |
| their handout), and bidding started at about $112,000 | | | | own, etc.? Who were the other investors interested in |
| while it was appraised for tax purposes at about | | | | it? Do you have their contact information. You might |
| $155,000. The investor I stood next to, advised that I | | | | need to call them up to buy the property from you if |
| should add another $8,000 to fix it up (the round | | | | your plans fall through. |
| number he estimates for most properties he buys) and | | | | |