Questions on buying foreclosures before they go to auction

[Kyle Kieke]

Good afternoon Bigger Pockets,

So in continuing on the journey of trying to figure out how to break into real estate investing, I came across some interesting information regarding foreclosures.   I have an associate who works for a large national bank and his primary job responsibility is analyzing data on foreclosures.

Before I continue, let me caveat this by saying that I haven't asked for or been provided any illegal information regarding individual properties or the current owners (I've consulted two attorneys and one other friend in the banking business).

What I do have is essentially information on SFR properties that are going through the foreclosure process OR have been foreclosed on that are awaiting sale at auction. I have been told that it is perfectly legal to purchase these properties IF the bank and/or trustee (re: law firm) is willing to sell, and that I can negotiate directly with those entities with the ultimate goal of purchasing these properties at a discounted rate. Many of these properties have substantial "meat on the bone" regarding the foreclosure amounts versus what the property is worth. It appears as if I can cherry pick the deals that have the most room in them provided I can negotiate the sale from the bank with the goal here of purchasing properties that have an ARV of >200K because they're easier to move quickly.

Now I've mentioned this situation to a few people that I know who are real estate investors, and these people have all expressed interest in purchasing some of these properties.   My questions are as follows:

1). Where do I start with the bank and/or law firm acting as the trustee for these properties?  I'm pretty busy with my day job for the time being with no intention of leaving anytime soon, so my time is limited on how much I can devote to negotiating these deals.   My initial plan would be to wholesale these deals or even put them on the open market if there isn't enough room for a wholesale deal.  That being said....

2). Is it possible to do an assignment wholesale deal in a case like this?   These properties would have to be purchased with cash, something I'm short on at the moment.   Doing deals like these would allow me to build up my war chest to go after larger deals in the future provided I can keep the deal stream flowing, but some of the potential buyers I've discussed this with could buy a few deals a year, and they all know people who could buy more.   My first contact I discussed this with (a family member who owns a few rental properties) has expressed interest in a partnership to purchase some of these properties.

3). Does anyone else out there have ANY experience with a situation like this?  If so and you're willing to share your experiences please post here on this thread or message me.   I'm trying to formulate a solid plan so that when I approach the bank I can appear somewhat credible.   I know I'm not going in there tomorrow and buying 50 properties off of their books, but I feel that putting together 5 deals this year is possible.   I want to represent myself in the most credible way possible and not burn any potential bridges or future leads, i.e. I don't want to look like a complete idiot.

The intention here is to try and get a competitive edge buy buying these properties before auction so I have less competition from others driving up the price.   My end game strategy on working these foreclosures would be to establish a relationship with several banks as a reputable buyer with regular access to these types of deals, then I can move on to bigger and better things.

Thanks in advance,

Kyle