What is the best way to acquire a foreclosure property?

[James Newkirk]

Greeting Everyone,

My name is James, I am an active duty military member currently stationed in Ca, but I am looking to invest in the San Antonio area due to high price of local real estate. Lately, I have been reading up on how to purchase a foreclosed SFH. I have come across a few properties that are being offered for prices as low as $50K, yet the value is assessed at prices ranging from $90-120K. From an equity standpoint, this seems almost to good to be true. I have seen these offers posted on sites such as Zillow, Auction.com, or listed at a live auction on the local court steps. From what I see these types of properties must be purchased with cash or check on scene.

My question is, are there sites that allow for these great foreclosed properties to be acquired through means of financing?  And if I must pay cash and pay $40K for example, is there a certain time frame I must wait before I can take out a loan on the property and  will I be able to get back the full $40K or only a portion?  I ask these questions, because I hope to get my money back out and repeat the process.  All answers are very much appreciated!

[Chris Pohlson]

@James Newkirk Keep educating yourself. What you see on Zillow or Auction.com are REO's...bank owned properties that have gone through foreclosure and are now being sold by the bank. If you're relying on Zillow's "Zestimate" for an accurate value of those properties in their current condition (or even ARV), stop. No one is listing properties on the MLS at fifty cents on the dollar. Get a local realtor to walk them and give you comps.

Auctions on the courthouse steps are a different beast altogether.  You need to look for liens, tax liens, judgements, back taxes, 2nd mortgages [why? because:)], and more...

In my state auction is at 11 am and payment is expected in full by 3 pm.  There is no way an FI can put a lien on a property in that short amount of time so financing is not an option unless you have a prior commercial relationship with your FI.  It's a cash game.

I'll keep answering your Q's and let you know in my state the right of redemption is 6 months.  Basically that means when I buy a foreclosure, I can't touch it for 6 months unless I get with the mortgagee that was foreclosed on and work out a deal.  They have the right to redeem (meaning paying me back in full) within that 6 month period.   On the last foreclosure I bought, I then couldn't take out a traditional mortgage until the 6 month seasoning period was up after taking possession which was 6 months after the right of redemption (so 1 full year after purchase).

This is a lot of sh*t to understand. Don't get discouraged.  Don't let your eyes glaze over.  Stay focused.  Keep learning.  GO TO A COURTHOUSE STEP FORECLOSURE AUCTION IN YOUR AREA...even if you have no chance of buying a property.  The networking opportunities are as good as anywhere for a new real estate investor.

Good luck investing.  Thank you for your service.  PM if you have more Q's and we can connect.