Green as Grass - 1st Timer - Information Request.

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Green as Grass - 1st Timer - Information Request.

Cary Plummer
Member since 2020 · 5 posts · 2 votes

I'm from Mississippi and am extremely new to Real Estate but I'm at a point in my life where all my life's knowledge points directly at Real Estate. I'm currently living in Los Angeles and found a single family 2br potential property up for auction with a 10k opening bid back in my hometown. The estimated value is over 100k and I used to work in the area of the property. It's not a great area but it's not horrible. The property is currently occupied but is foreclosed and owned by the bank. I can come up with the Capital for the opening bid but that's about it. I'm currently on my second real estate book and have watched several Bigger Pockets posts on Youtube. I'm a go big or go home type of person and I'm great with numbers. I'm low maintenance and as frugal as they come. I know how to do most home repairs and great at finding deals on house materials, appliances, etc. I'm not great at networking but I'm an intelligent person that can pretty much figure out anything, currently how to network. I'm more interested in BRRR rental properties. So, if you've made it this far, maybe you're willing to go a little farther. (Shawshank Redemption) My main question is, if the house goes for 10k, what other steps do I take on the occupants, appraisal? Is it realistic that this property goes for less than 15k?

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Account Closed
Rental Property Investor · Tyler, TX · Member since 2019 · 72 posts · 39 votes
6y

@Cary Plummer It's not likely that the property goes for under $15k, but let's assume it does. If you were able to get the property for $15k, what would your strategy be? Sell it / flip it / move there / etc. If your goal is to sell it, run some comps on similar properties in the area and see how fast they're selling and whether there's any demand. If you want to flip it you're going to need some cash or a hard money lender. I do not recommend getting into the property if you don't have any reserves to fall back on. 

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  • Account Closed
    Rental Property Investor · Tyler, TX · Member since 2019 · 72 posts · 39 votes
    6y

    @Cary Plummer It's not likely that the property goes for under $15k, but let's assume it does. If you were able to get the property for $15k, what would your strategy be? Sell it / flip it / move there / etc. If your goal is to sell it, run some comps on similar properties in the area and see how fast they're selling and whether there's any demand. If you want to flip it you're going to need some cash or a hard money lender. I do not recommend getting into the property if you don't have any reserves to fall back on. 

    3Reply
  • Cary Plummer
    OP
    Member since 2020 · 5 posts · 2 votes
    6y

     Thanks, my mother is paying rent a few miles away and I wanted to get her in there so we could pay it off together. I guess I should have lead with that but in your experience does that change your recommendation? 

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  • Account Closed
    Rental Property Investor · Tyler, TX · Member since 2019 · 72 posts · 39 votes
    6y

    Well, at auction you'd have to cut a check on the spot. If it was pre-foreclosure or a foreclosure being sold by an agent on behalf of the bank, you could use your $10k as a down payment and buy the house WITH your mom and split the equity. You would both be on the title, she would live in the property and manage the property and you would be an equity partner. This allows you to get the house at a 3%-5% down payment and finance up to around a $200k home (though you may not want to go that high). Before doing this, you should consider whether the market in your home town is appreciating in value so you're well informed before purchase. 

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  • Cary Plummer
    OP
    Member since 2020 · 5 posts · 2 votes
    6y
    Originally posted by @Account Closed:

    Well, at auction you'd have to cut a check on the spot. If it was pre-foreclosure or a foreclosure being sold by an agent on behalf of the bank, you could use your $10k as a down payment and buy the house WITH your mom and split the equity. You would both be on the title, she would live in the property and manage the property and you would be an equity partner. This allows you to get the house at a 3%-5% down payment and finance up to around a $200k home (though you may not want to go that high). Before doing this, you should consider whether the market in your home town is appreciating in value so you're well informed before purchase. 

     Great information! Thanks again!! 

    0Reply
  • Michael Payne
    Rental Property Investor · San Jose, CA · Member since 2018 · 8 posts · 3 votes
    6y

    Houses rarely sell for the opening bid  and if they do  there's a reason other people are avoiding it . You also want to do your due diligence when buying a property from auction. You will be responsible for any leans that may have been put on the property. California is a tenant friendly state, so you may also spend a nice chunk of change having to evict the tenant. 

    1Reply
  • Nina Granberry
    Rental Property Investor · Brooklyn, NY · Member since 2016 · 84 posts · 139 votes
    6y

    @Cary Plummer good question and great advice from @Account Closed

    I would just say keep on reading, growing, educating yourself (everyday) so that you can make informed decisions in your RE journey. You do not want to rush into things without a plan, but also don't want to always only be preparing. 

    Are you saying that if the house at the auction has other bidders and they bid above 10k, that you will not be able to move forward in the bidding process?

    Also, have you considered:

    + the max amount you are willing to pay based on the ARV?

    + using the BP calculator tool to analyze this deal to make sure it is a good deal?

    + what is your plan for raising capital and building cash reserves?

    Just some things to think through. There will be other opportunities for you if this one doesn't pan out.

    1Reply
  • Susan Maneck
    Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
    6y

    @Cary Plummer, I've been investing in properties in Mississippi for the last nine years but I have never bought one on auction. I have bid on a few when I pretty much knew the property in question but in my experience these properties usually end up on the MLS either as a HUD, VA, Fannie Mae, or Freddie Mac forclosures often for less than the reserve amount on auction.com which you usually can't see. I've never seen a property go for the opening bid. If it is in a poorer neighborhood it is certainly not worth any 100K. I usually buy properties in Jackson for 30-40K. We are talking about 3bdrm 2ba with garages and 1/4 lot. One reason I don't buy properties at auction is because of perennial problems with foundation problems. Unless you have someone who can check this property out for you, I wouldn't risk it. My advise is to wait until you have about 40K to invest and get a real estate agent to help you locate a good property.

    1Reply
  • Cary Plummer
    OP
    Member since 2020 · 5 posts · 2 votes
    6y

    How do I acquire the Capitol to invest in a 35k property and 10k for rehab?

    0Reply
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