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Actual Cash At Auction--where From??

ben_blonder profile photo
  • Tuesday, May 25, 2004 @ 12:28 PM EDT
  • 8 Comments

Hey there you helpful forum goers....
A quick question if I may:
I have found a house in my area that is $206,000 assessed value and the minimum bid at the foreclosure sale (taking place this wed the 26th may) is $94,000. In this area (as in most) the assessed value is short of FMV, so assume this property is worth about $220-225k. Comps right next door and across street are going for 290k and more. There are no liens against this property (clear title), so there is a lot of equity here!
In this county you need to remit full payment by 1pm the day of the auction. I am preapproved with an independant mortgage co for $188,000 on a 5/1 ARM at 5.25 and 2%cap. However, he said they can't broker these kind of deals. So I called a hard money lender, and he said they don't do these kind of deals either. Is this because of the uncertainty going into the auction as to how much will be paid at the end? Any ideas as to how i can come up with the cash I need (I am willing to pay up to 160K for the property)? Remember that I am approved for a 188,000k loan...another thing: I would love to deal with this lady pre-auction but she has proven impossible to find so the auction is the only way.
So my question reposed is: How do you all buy your properties at the courthouse steps? How can I get the money I need to do this great deal (which would be my first btw)?
Thanks in advance for all info you can give, this forum is a godsend. Power to you CRIs out there--
Ben

Comments(8)

  • no photo
    tinman175524th May, 2004

    Ben,
    Most people I know that buy houses at auctions use a warehouse line of credit. But any line of credit is what is needed to buy these peoperties or cash in liquid form also works. I have several different lines of credit.
    You probably should to applying for the following types of credit:
    1) home equity/no equity lines of credit
    2) business line of credit
    3) signature line of credit

    You need credit with large margins to buy from an auction. Also rehabb lenders who give you a revolving line of credit would work for you. I had one in the 90's for $400,000.00, I could run as many jobs as I could as long as I didn't go over $400,000.00

    These are some of the types of financing you need to be approved for.

    Lori
    [addsig]

  • no photo
    WiForeclosures24th May, 2004

    I also say to go with a line of credit

  • no photo
    ben_blonder24th May, 2004

    Thanks!
    Lori, I've always found your replies to topics to be very concise and helpful and this one was no exception.
    One more thing tho--as this is going to be my first deal, and I am currently a renter, I have no real equity. I own three cars and two dogs (can I put those up??) and that's about it.
    This no equity line of credit sounds about right for me huh? My credit score is only 600. I've never heard of this type of credit I assume it has high interest, but I believe the numbers in this deal would justify that. Any good referrals for lenders on a no eq line or other sort of credit that could help me would be greatly greatly appreciated.
    By the way the auction got postponed for another week so I have time!! wink
    thanks again all,
    ben

  • no photo
    myfrogger24th May, 2004

    Without some sort of collateral you are probably not going to get approved for that amount of money.

    I would concentrate on finding an investor that you can birddog this deal to for a couple of thousand.

    GOOD LUCK

  • cjmazur
    cjmazur24th May, 2004

    or a rich co-investor in the next 2 days..

    Or bird dog the deal.

  • no photo
    tinman175525th May, 2004

    I would have to agree with myfrogger, you will not get what you want in the allotted time period. You and every new investor should start by getting your ducks in a row. Since I deal with people on a daily basis, everyone's main need is money,. Get a copy of all three credit reports and take a look at yourself, does your credit reflect accuarately your payment history. Do you need to make a change? Set up some goals to improve your spending, paying of your bills, and timeline to start buying properties. From what you are saying you are not in that position. What I suggested above is what every invstor should have. Now if you don't qualify at this time, start working on how to be able to qualify.

    I like the fact that I have many ways to get money on a couple days notice, this makes me more powerful and a strong force in Real Estate Investing. It didn't happen over night, I had to start at the bottom also, many years ago. Money is the most important tool we have, whether our own or somebody else's. It takes money to make money.



    Lori
    [addsig]

  • no photo
    ben_blonder25th May, 2004

    Lori--
    Thanks again for your opinion. As far as liquid cash goes, I have about 20k, enough to be able to rehab the property and make it sellable quickly. I think I am going to try and find an investor with cash and have him put it up and split profits on the end.
    This deal is too juicy (over 100k equity) to just birddog. I'm going to see what a well placed classified ad can do--I will keep you posted.
    Ben

  • no photo
    tinman175525th May, 2004

    Ben
    If you have $20K here are some options for you:
    1) is the money in an account where you do your banking, checking and savings?
    2) if yes, Start there and applied for a signature line of credit,
    3) 600 and $20K in reserves could get you into the door with a rehabb loan
    4) also check hml with warehouse loans. There are many in Co.

    I think you have a shot!!!!!!!!!

    Lori
    [addsig]

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