First foreclosure auction!, First Rehab project.

[Wilson Lee]

There are cautionary tells in the pod cast and in the blogs here on BP about how to beat out the competition at auctions and negotiate with contractors.  This week, I armed my self with the advice bestowed to me in the forms and set to battle it out at my first foreclosure auction! 

I started Monday last week by scouting out the auction.  I watch the bidding and learned there is a website for my market that list every property for auction and the starting bid. I found one I like the starting bid of, $15,200. The auction date was in 1 week.

Next,  did  some home work.  Comps for this house was around $65,000.  I found This Website for a DIY title search.  I did research this property's last owners, There was no liens.

Then, I asked and loan officer at Wells Fargo to give me a $35,000 personal line of credit.  I think I am a nice person and they should give me their money... Right? - 3 days later they approved me.   The loan officer told me about a local credit union who may want to carry the mortgage after it is fixed up.

Next, I drove by the house.  It looked like people lived there or at lest their stuff did, The listing put out by the auction company also said it was occupied. I called the power company who told me the power had been off for 4 months.

So this lead to the auction, I arrived before the auction started and spoke with the other investors there.  I told them about what I wanted to do and asked about their careers.   I found 4 investors where there to bid on that property.  The first was Terry, he was a land lord and owned 2 house on that street.  The 2nd was Markus, he was a turn key provider from CA. Then there was Josh who was a DIY weekend flipper.  Last I meet Jason who is a contractor low on work for his crew. 

I knew each one of them had deeper pockets and had more know-how. I was out of my depth.

The results?   Terry and Markus agreed to not bid, They both where happy to see a new investor, they told me what they think the house is worth, and how high each was willing to bid. Terry left before the bidding started. Markus stayed to bid on other houses.  Jason, the contractor, offered to not bid if I would take a bid form him on the rehab job.  Josh was the hold out. 

The bidding opened on this house, I bid first, $15,201.  Josh bid 15,300. this keep up until 20,200 At this time  Josh let out a sigh and asked me if I really wanted it. I nodded. The bidding closed.  I had my first winning bid.

After math, Markus, the whole seller, invited me to call him if the property was more than what I could take on.  He offered $36,000 for it.

The former owners still had personal items in the home.  Mr and Ms Williams found my information and contacted me. They walked me through the house to show me every nook and cranny.  They handed me their set of keys, unsolicited.  The house was dated, but clean and intact.

Jason, the contractor, Came out the the property with me.   He gave me copies of his insurances and his bonding info.  He estimated it needed $14,000 in rehab.  He offered to do it for $8,500.  He is not charging a mark up on materiel or his GC's fee.  He is happy to keep his crew working.  The work starts in 2 days!

I did not expect any of this.  Everyone involved was great. They all wanted my to succeed.  The last owners are amazing.  Even my bank made this easy.  I could do this some more.

[Wayne Brooks]

We look forward to your first spy thriller.