First of all, I’ve come into a rather large sum of money and have decided to get into the real estate investing game. I’ve been following the public notices and I have found a couple of properties I think would be good investments and I could flip them in a short period of time.
Here’s the rub. I know nothing about buying at a trustee sale. I’ve been researching and actually decided to go down to the county courthouse a couple of times just to watch the process. Problem was, no one ever showed up. I sat there and waited for the attorneys and the realtors and other investors to show up and no one ever did.
I figured that the loan was cured and so the house was no longer on the auction block. The next time I decided to go the courthouse, I decided to call the offices of the trustees to make sure certain properties were still being sold that day at the specified time. I didn’t get much in the way of answers and was told their website had all the information. Again, I showed up at the courthouse and saw no one else. Later that evening, I checked the website of the trustee and found that the property I had been interested in had actually sold.
How did I miss it? What am I doing wrong? Is there a good, reliable book that I should read that will help me in this process?
My other question has to do with these organizations that sell forclosure lists. Are any of this organizations reputable? Is it worth to buy a list or become a member of one of these places to receive monthly listings?
Thanks in advance for any answers and suggestions!
If you came into some money, don’t you think it would be better to lend it to a seasoned investor at 10%, and just sit on your ass getting paid for doing nothing, rather than risk it all in an undertaking that you may know nothing about?
LoriC05 the fact that you have a large sum of money has no meaning in real estate because you don’t use your money in real estate. Real estate without leverage is no better than any other investment. For example if you come across $100,000 and you take it and buy a house for $100,000 cash and that house goes up 10% and is now worth $110,000 you have made $10,000 or 10% on your money. If instead you had only put $10,000 down on that same $100,000 house and it went up that same 10% the house would still be worth $110,000 and you would still have made $10,000 but the beauty of leverage means that you made $10,000 on a $10,000 investment so you made 100% on your money.
In real estate the less money you put into a deal the more money you make.
Trustee Sales Purchases can be profitable but also a bank buster, you could lose a lot simply cause you cant see the condition of the property and inspect it properly. Also, good deals are far and few to the beginner, you are competing against Lenders who already have the inside scoop, they are in control of the sale to a great extent, they can postpone, change locations and timing and a host of other strategies if they want the property themselves. Then, there are companies who specialize only at buying at TS, these are huge banks that have reps attending all possible and profitable deals. They employ research companies, and professional bidders just to bid at the auctions, and then, there are those old timers and regulars who attend all these auctions and often work together as an investment group. Pre foreclosures require less investment, you get to see the inside and find out a lot about the property from the owners/renters/neighbors. You can estimate you expenses and almost determine approximate profits if you have a pool of ready investors ready to buy from you. And finally, you can arrange for owner carry back loans to reduce investment as well as risk, cause you can make stipulations in your contract that protect you even after you take possession, by using this tool, you will not only get more accurate information form the seller, you can use all kinds of different investment strategies to leverage your cash out lay and tremendously increase your profits and ROI .
There are many good lead providers, but even the best has its pitfalls, which you will adapt to over time. Depending on your country and city the companies operating these lead services can vary. If you are doing TS, you need a more specialized lead provider that can give you in-depth info, on the other hand, if you are doing pre foreclosures, all you need is a name and address and very basic loan and default info. Much easier to get and a lot less expensive. So, subscribing for a service depends on your investment strategy. If you can afford an online service, that’s the best way to go. If you request a Title Company to provide you default leads, they will do so on a weekly basis around 5o to 75 names, usually about 20 to 30 days already in default. Not fresh leads, but also not impossible to work with. The best place to find a good company is go down to the County Recorders office and ask for names of companies who come to extract defaulted homeowners names, then call up the company and interview them regarding their services and see what fits best for you in your budget.
you really need to understand what you are doing before purchasing at a trsutee sale; otherwise, it is highly likely you will be come real estate road-kill
maybe consider something a bit safer to get going like buying REOs or perhaps have someone broker out your money for Hard Money Lending
Like I said, I’m not ready to jump into the game just yet. That’s why I posted my questions here. I intend to proceed cautiously. I had thought about pursuing preforclosures. I live in a small town and so it has been fairly easy for me to get the addresses and names of owners of the properties that are about to be foreclosed. How would one go about making an offer to an owner tactfully? Would it be better to send them a professional letter stating my interest in buying their home? Would it be better to go to their door in person? Should I mention that I know that they are in foreclosure?
I know I’m asking a lot of questions and if someone has any recommended resource materials, I would be more than happy to pick those up and find my answers.