Stepping into the Real Estate Investing for the first time

[Young S Hong]

Hello BP family!

I am so glad that I found this great community where I can learn a lot about Real Estate Investing!

Here is quick introduction about me.

My name is Young, and I was born and raised in South Korea. My parents and I moved to USA(the greatest country in the world) when I was 15. I went to highschool in NJ and graduated from the Naval Academy this year(2017). Currently I am in Florida getting trained to be a navy pilot. I believed I am very friendly and comfortable with connecting with new people. I hope to make many friends in this community!

Now, I would like to share the reason why I got into the Real Estate Investing. When I was in highschool I never realized how tough it was for my parents to adopt to new society when they lived their entire life in South Korea. They don't speak English and have no knowledge about how to make "money work for them" as Mr. Kiyosaki would say. They are very diligent workers who saved decent amount of money past 10 years. I realized that my parents really scarified alot for me and recently they finally told me that they are interested in purchasing their first house ever. I was very proud of them but at the same time I was concerned because I know they don't know a thing about buying a house nor do I. So, I decided to study about real estate investing in order to help them so that I can build experience of buying properties which I will use for myself as well as help my parents retire. I apologize for very long introduction... I tend to talk alot when I am passionate about something.

Here is my question,

I have read many different ways to purchase houses. But, I am not so sure how to purchase a house though auction and what are the pros and cons of that. I am reading an articles about them, but I would like to hear from those who has experience in buying houses through auctions. Thank you for your time and hopefully I can build good friendship/partnership with a lot of you in the near future!

[Odie Ayaga]

Welcome to BP @Young S Hong! Don't apologize, reading your story was inspiring and I hope it leads to success! I have not purchase houses through auctions, but maybe I can help you out a little bit. First off, I like to think of auctions as two different types. There's foreclosure auctions and there's REO auctions.

Foreclosure auctions involve houses being sold "on the courthouse steps" (many are online these days) as a result of a mortgagee defaulting on their loan. This can be very risky if you don't know what you're doing as there could be liens on the property, an owner who has not moved, unsavory conditions such as an oil leak, etc and you likely will not be able to get into the property to inspect prior to bidding. I went to a presentation by Marc Sherby at a REIA meeting and he provided a lot of good insight into the process. He wrote a book you can purchase on Amazon here.

On the other end of the spectrum, if the bank takes over the property and it becomes Real Estate Owned (REO) through this process, one of the ways they may seek to dispose of the property is by having an auction company (e.g. Hubzu, Auction.com) offer the property for bid on their websites. The details on these kinds of auctions can vary from website to website.

I have not participated in either auction so hopefully if any of this was inaccurate a more experienced investor can correct me. If you want more information you can try the search bar in the upper right of your screen and/or add "auction" as a keyword alert and you can read up as the topic is discussed around the forums. Good luck to you!