Are Foreclosures a good deal in Dayton??

Question

Hello,

I'm just getting my feet wet in real estate investing and am interested in foreclosures in the Dayton area. I may be new, but in looking at foreclosure prices it seems like there is some real potential for a buy and hold deal. I know the major pro is the price and the major con is that you can't see the inside. With that said, by doing some research and physically checking out the place as much as possible, I think opportunity is still there.

Is there anyone who specializes in buy and hold deals with foreclosures in Dayton? If so, I'd be more than happy to buy you a coffee if I can pick your brain for a bit if you have time.

Thanks

John Bongers

John Bongers · Answer

@Mark Nickoson

Thanks for the feedback. I've noticed that the auctions have been fairly competitive the last few months. What I've also noticed is that since housing prices have risen so much in the last 12-24 months that the appraisal values used at auction are way below the actual potential values of the houses. I think this creates a situation where even with an expensive rehab, once the house is refinanced and 70% of the equity is take out, I'll still end up receiving a check from the refi.  I've also noticed that if I go this route, the properties cash flow might be an issue.

I'd really like to know what you think, and how you went about your purchase at auction. Maybe I could grab you a coffee and we could talk about it.

John Bongers

Mark Nickoson · Answer

@John Bongers

I bought a house at auction close to the Dayton Mall back in 2014.  My auction price was pretty low back then but it needed a lot of rehab.  I put in about 16K and I did all my own work.  The price now has more than doubled.  But there is a lot of demand at auctions so bids go higher and margins are thinner.  Therefore, your risk is higher and cash flow is a gamble.  I'm not buying right now.

John Bongers · Answer

@Chris Seveney

Thanks for the feedback. By saying the last few years have been slanted to a sellers' market, are you referring to low supply and high demand, which has driven housing prices up. Do I just keep looking and wait for a correction in housing prices before I dive in?

Thanks

John

Chris Seveney · Answer

@John Bongers

Be patient the last several years have been slanted significantly to a sellers market. Markets will shift and opportunities come you just need to be ready. Keep looking as there are still deals and some foreclosures are deals but they have high risk.

John Bongers · Answer

@Chris Seveney

I had no idea that foreclosures might need that kind of budget to get them up and running. What would you suggest for a first time investor. Most other options don’t seem to have a ROI that’s very attractive.  any suggestions would be greatly appreciated.  Thanks

John Bongers

Chris Seveney · Answer

@John Bongers

With foreclosures you need to assume your going to spend $30k+ to get rent ready, so if they see lower valued properties you will be upside down by the time you complete the renovation. I would not recommend first time investors bid at foreclosure auction for their first deal