Questions: Rural Development (Gov’t) forclosure - Posted by Corey
Posted by Corey on October 06, 2002 at 22:34:16:
I live in the rural midwest and am looking at an add in the local paper. "Forclosure sale 4 bedroom, 2 story home 2 baths, 17xx SQ FT. Appraised value xx,000.00. Sale Date: (soon). Rural Developments bid will be $x,000.00. A higher bid will purchase the property. Cashiers check needed the day of sale. For more infor contact: Rural Development office (local office and phone number.
I have kept important info private as I don’t want any more competition on this sale.
The Development bid is 20% of the “appraised value”. Now I am pretty familar with the local market and the “appraised value” is probably 10% higher than market selling prices.
I am wondering what the do’s and don’ts are of buying at a forclosure sale. Looking on the Rural development website they state: “The exterior & interior need painting. Floor coverings & shingles need to be replaced. The garage should also be replaced”.
I have been buying homes and one commercial property via semi-conventional means. I have partnered with my father on these deals. We buy, do some repairs and keep for long term rental. Most have provided a decent cash flow of $200-$300 each per month in positive cash flow. This one looks like it would cash flow $300-$400 a month.
Here are my concerns and problems.
#1: Not enough time to get funds from a traditional mortgage lender.
#2: Possible title problems after sale.
#3: Possible redemption from former owner after sale (Statutory right of redemption).
#4: Internal condition of property including plumbing, wiring, foundation, etc…
So how does a person go about getting this deal done? What are the things to look out for before bidding? How can a person obtain “temporary funding” until a regular mortgage can be obtained? What about buying the home from the “current owner” before it goes to auction?
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