Posted by Redline on August 04, 2000 at 23:43:55:
Tupac,
Auctions are NO PLACE for beginners … and I’ve heard some experienced investors even say they don’t like them. 9 times out of 10 the bank ends up with the property after auction anyway. Besides, auctions require CASH - available, and plentiful.
RL
What’s My Chances at an Auction? - Posted by Tupac
Posted by Tupac on August 04, 2000 at 22:02:30:
I’m studying the process of auctions and think this might present some opportunities. First, my area is so expensive and the rent rates are so much lower than property values (i.e. rental $1200mo, purchase price $170K) that I’m finding it almost impossible to get a rental property with positive cash flow.
Even with a motivated seller and great terms, it’s still hard to get a positive cash flow when the disparity between purchase price and fair market rent are so diverse. Thus, I believe I should be looking for deals where I can buy at steep discounts and thus I’m looking at auctions.
For those who have bid at auctions, how often were you successful in getting the property or were you usually outbid by someone willing to pay retail?
Argue your limitations… - Posted by ray@lcorn
Posted by ray@lcorn on August 06, 2000 at 20:17:49:
…and they’re yours.
That’s a saying that John Behle likes to quote, and I agree wholeheartedly. The posters below seem to have some fear of the unknown in discussing outcomes without the benefit of the experience.
Yes, auctions can be scary. But they can also be exhilirating. I love them. Do you get a bargain? Sometimes. We showed up at one a couple of weeks ago thinking there would be no way the house would be reasonable, and paid 25,000 less than appraised value. But that was one sale in a chain of probably a half a dozen where we didn’t even bid.
The key is to know your market. Know what comps in the neighborhood are. We use a software package called “Know Your Neighborhood” that gives pretty accurate info… enough to base a bid on. I’ve bid on properties sight unseen, but I make sure I have the key facts first… and I know and trust the people giving me the info.
When do I bid? It depends on what kind of mood I’m in. Sometimes I like to be there from the start, but most of the time I don’t bid until it seems the last bid is in. Then I will hit the bid with hard and fast raises up to my limit. Most of the time I walk away without buying a thing because I refuse, except in special cases, to pay retail.
You do have to be able to close, so it is a good idea to line up a source of fast cash befpore you buy, but I have done that backwards too… make for some stressful days at times!
My advice… go to a few sales just to see how its done… do your homework on the property first and see if you were close on what it brings. Then jump in and try it out! It is a great way to learn this business on the excitement plan!
Good luck!
ray
Re: What’s My Chances at an Auction? - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on August 05, 2000 at 13:53:07:
Your chances at auction depend on you almost entirely. Do you know exactly when to bid? Do you know when to shut up? Do you know who the “big hitter” buyers are in your market? Do you know them, and thier associates, on sight ? And finally do you have all cash? Or can you get it without a problem, very quickly?
Cash is king, you know.
Often, at least in my area; properties have been selling at more than appraisal. This is usually someone who is purchasing to live in. Might be a person who is retiring and wants this particular house. For whatever reason it is very important to know when not to bid. This is a very difficult undertaking for the experts, and more difficult for most of us other folks. Go slow and learn it well…ED