I'm interested in bidding on a property scheduled to be auctioned on the courthouse steps. The property is is tenant occupied- I've knocked on the door and briefly spoke to the tenant (which in itself feels like overstepping), but I have not been inside the property. Has anyone bid on a property they haven't see the inside of prior to bidding? Any suggestions moving forward?
Investor · Washington, Washington D.C. · Member since 2012 · 239 posts · 168 votes
7y
I have had some success buying investment property via live auction without having seen the interior. How well you know the neighborhood? Have you looked at recent sales there? Have you done much house renovation or repair? Do you have contractors you can call?
Suggest you get a ledger and lease from the auctioneer showing rent and record of payment. If it's not cash flowing and you'll have to evict the tenant, you are buying a headache. Would you be ready for that, even if the hammer price is right? Also don't forget the buyer premium!
@Ned Carey said it best: there's a lot of risk buying property that way, and you can only hedge it by setting your maximum bid low and be willing to walk away if the bid price goes above it.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
7y
@Hen Ley I bid on tax lien properties all the time without seeing the inside. I bid based on what it looks like on the outside but I assume it need significant rehab. It is a big risk, so you need to bid low enough to cover that risk.
Landlord/Mentor · Baltimore, MD · Member since 2011 · 96 posts · 97 votes
7y
I agree with @Ned Carey. I have bought properties without ever getting inside- but I do assume that the property will need significant reno on the inside.
If you are able to speak to the tenant- ask them what needs to be fixed. If you are able to build a rapport with them they may let you in.
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
7y
@Hen Ley, I would bid on properties like that but as others have commented with very conservative assumptions about the condition.
Keep in mind just because someone else is bidding more doesn't mean it's worth more.
As an example, many people come to my area from NYC, Philly, & NJ to bid on tax sale properties because we are only a couple hours from these areas. Since they are a distance away they only have limited opportunities to scout properties. So, they tend to bid higher on these properties than I will because I feel that I can find the same house for the same price in a deal where I can inspect the house and dramatically reduce the risk.
That is because I am local and these other people are not. So, there are many factors into what someone is willing to pay for sight unseen properties including where they come from.
New Rochelle, NY · Member since 2018 · 235 posts · 151 votes
7y
Yes I've done it but I've only won 1 auction because I'm super conservative and not willing to pay much because I assume the property needs a ton of work.
Investor · Washington, Washington D.C. · Member since 2012 · 239 posts · 168 votes
7y
I have had some success buying investment property via live auction without having seen the interior. How well you know the neighborhood? Have you looked at recent sales there? Have you done much house renovation or repair? Do you have contractors you can call?
Suggest you get a ledger and lease from the auctioneer showing rent and record of payment. If it's not cash flowing and you'll have to evict the tenant, you are buying a headache. Would you be ready for that, even if the hammer price is right? Also don't forget the buyer premium!
@Ned Carey said it best: there's a lot of risk buying property that way, and you can only hedge it by setting your maximum bid low and be willing to walk away if the bid price goes above it.
Thanks, @Nancy Roth- To clarify, when you recommend getting a ledger and lease from the auctioneer, are you referring to bank owned properties? The property I'm interested in is scheduled to be auctioned, but not yet owned by the bank, so it's the private owner who is leasing the property-
Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
7y
You definitely want conservative numbers for this type of investing. Also, factor in cash for keys since the property is occupied. If it's your first time at an auction, keep an eye out for more experienced investors looking to bid you up. They know newer investors get more emotionally invested into the properties. Stick to your numbers.
Investor · Washington, Washington D.C. · Member since 2012 · 239 posts · 168 votes
7y
Hi, @Hen Ley, the bank-owned properties I've bought have not had ledgers or any information at all, and a courthouse-steps type auction does not give you much leverage to find anything out. The only thing I can think of is to contact the auctioneer and ask if the owner is open to a pre-auction bid. Maybe you can enter a dialogue with owner that includes due diligence on cash flow. Are you working with a realtor? Perhaps the realtor can be an intermediary. If you cannot get any information at all, you need to assume the worst (no cash flow and possible eviction) and bid accordingly.
I like @Account Closed's suggestion that you talk again to the tenant to ask what repairs are needed, and determine whether the tenant is interested in staying--or is planning to move.
I'm interested in bidding on a property scheduled to be auctioned on the courthouse steps. The property is is tenant occupied- I've knocked on the door and briefly spoke to the tenant (which in itself feels like overstepping), but I have not been inside the property. Has anyone bid on a property they haven't see the inside of prior to bidding? Any suggestions moving forward?
I've done it a couple days a week for nearly a decade. Take your best guess, figure the property is a bit worse than that, and plan accordingly.