Anyone bought a foreclosure back in ~2008?

Question

Did anyone buy a foreclosure back in 2008... what was your experience like?  What worked and what didn’t?  What was competition like?  How long did buying/closing process take?

Would love to pick your brain if you’re willing.  Please feel free to direct message as well if that would be better.

Thank you in advance BP community!

Roman M. · Answer

I bought foreclosures between 2009 and all the way to 2015. In Miami it was highly competitive and there was always tons of people bidding. I must have submitted 50 offers on various properties before I got my first deal and figured out that i always had to go over asking price because there was always a multiple offer situation. Sometimes I would bid 10% over asking just to blow everyone out of my way.

I bought at online auctions where you closing is basically next day at 12pm. I had to do tons of due diligence as there was no title insurance and even after I paid, I wasn't 100% sure if I missed any details. It was crazy time.

Everyone was trying to get an edge on competition.

I bought REO which was much easier deal in terms of due diligence. Closing would take about 30 days.

I bought Short Sales. Closing took anywhere between 60 days to 4 months (if it went through).

It was fun times but now that I look back, I wish I did not walk way from some of the deals.

I kept most of the deals for 2 to 3 years and made good money.

Pat L. · Answer

Also grabbed a lot very cheap & most required work. Banks let them rot, kids got in, a couple were stripped of electrical/Cu piping & yet some were left complete with all the tools, drywall & new HW tanks. We flipped them ALL as lease-to-owns & they were subsequently rehabbed & rented by those who took them over. After a few people walked away we flipped them again, a couple 4-5 times. Some we still own & the rest were eventually sold with us holding the notes.

We just sold one (close next week) for $56k holding the note @ 8.75%. We got it for $17k in 2008 & several took it on as a lease-to-own. At their expense they completely rehabbed it, paid on-time then walked away. This was paid off several times & the last guy put in a $15k kitchen, complete with granite counter tops, all new hardwood flooring, some appliances & due to his business failing, separation/divorce & just giving up we took it back & paid the current tax arrears of $4k.

There will be many opportunities & cash will be the deciding factor, in fact this week we agreed to HML/finance a foreclosure for a fellow investor. 3 rental properties on 16 acres for the asking price of $59k, CASH. I guess no-one else had the ready cash.

Account Closed · Answer

I bought a few during the foreclosure crisis. Right now, my market is very strong and competition is fierce, but at the time I could basically just wander around and pick out whatever foreclosures I liked, they were all over.

The bank-owned (REO) homes had all been visited by an asset preservation company by then, so I'd go let myself in with a set of asset preservation keys I have and look around. When I started buying, REO auctions seemed to have just gone online, and it was interesting to see a new industry sprout out of the wreckage to unload all the inventory. I remember the first one I bought online, it was a very rickety website where I just kept incrementing the bid until I met the "unpublished" reserve. Deals were everywhere, so the bank would say "multiple offers, highest and best!" and I'd raise it a hundred and win. I don't think I lost a single deal I bid on. It felt like I was the only person in the world buying houses. I didn't know about biggerpockets or anything at the time (not sure if it even existed)

I also figured out I could trick one website to go into "multiple offer mode" by just offering twice. EG if I wanted to bid 21000, I'd bid 20,000 and then raise my own bid to 21,000.  The auction site would then contact me for "multiple offers!" and I'd stick with 21000 and win.  I admit this may have just been some dumb superstition ritual, but it worked so I kept at it until it didnt.

Closing was usually I think about 2 weeks? I had cash so I was ready to go. It may have been less or more, I can't really remember. It was a mobile notary deal where I signed the papers, usually in a Tim Hortons nearby.

Kenneth Garrett · Answer

I agree with @Pat L. most of them were pretty beat up.  The BRRRR method is a great strategy for these types of purchases.  Every once in a while you can get one that doesn’t need a lot of rehab.  To me that means under $15K.  Most of my BRRRR projects were rehabs of 30K or greater.

Kenneth Garrett · Answer

@Charles Phanumphai

I bought a number of foreclosure/ROE properties during that time.  Competition was fierce. There were so many of them available there were plenty to go around.  You could buy them for 60K-80K in my area.  Those are now worth $140K-180K.  I don’t think we will see the same thing as 2008, but the longer this lingers prices will definitely start to fall.  This time interest rates are super low.  They did have a moratorium on foreclosures back then for a while.  If homeowners receive forbearances where when this ends and all those payments are due at once versus moving those to the end of the loan and lenders are able to foreclose again, we will see a resurgence of short sales and foreclosures.  Opportunities will be available.

William Joseph · Answer

I bought a HUD owned condo with an FHA loan. I used the first time home buyer tax credit and literally walked with cash from the closing table. In my area the deals were still not really there in 2009/2009 so I don't regret not purchasing more.

I think if I had a take away from that time it would be to not try to time the next recession or buying window. Set up your systems and learn to operate in any type of market.

Anyone bought a foreclosure back in ~2008?

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