Purchasing with 60k cash at auction for rental - Good Idea?

[Nathan Asher Robson]

Hi,

I’m an Australian looking to make as much cashflow as possible using the 60k iv saved up over the past couple of years.

This would be my first purchase.

Iv strongly been leaning towards paying cash for a property for the usual reasons, plus not being a US citizen. However, the listings iv been looking at have been mostly between 70-100k renting for between $700-1000 per month.

So instead of stalling for the next 1-2 years to get my budget higher, I thought that foreclosures and auctions would be a good idea because I could get a property worth more than, say, 70-100k, with the 60k that I have, plus getting a lot more cashflow through rental income than what I initially thought I could with a cheaper property.

What are your guys thoughts? Is this a dumb idea? I know a little of the major pit falls with auctions and foreclosures, but is this idea realistic?

Thanks heaps

[Kyle Jensen]

@Nathan Asher Robson

Auctions can certainly provide opportunities to pick up properties at a discount, but it’s also riskier. Do you have reserves on top of that $60k for renovations? Chances are there will be several hidden costs and additional repairs needed before the property is rent ready. Since this is your first property, I would tend to shy away from auctions, but others may disagree with me on that. I think if you’re diligent with your research and put some offers out there, you should be able to find markets where $60k cash land you a decent cash flowing property.