Investment Property Loans used to Finance Trustee Sale Purchases

[Corey Dutton]

Particularly for auction sales, investment property loans for real estate are the most popular form of financing. Although each trustee sale has its own unique set of rules, the nature of an auction is a fast sale that usually involves a ‘all cash’ transaction. Some real estate investors are able to get investment property loans from their banks to purchase properties at trustee sales. But for the majority of investors, getting a bank loan is an impossible task for a trustee sale purchase. For those experienced in auction sales, investment property loans are an important tool if their own cash isn’t sufficient.

And because so many trustee sales require that buyers must complete the transaction within 24 hours of the winning bid, a bank loan is simply not an option. The majority of buyers use all cash, while some are able to use investment property loans to take down these fast auction purchases. But how can a real estate lender finance an auction purchase as quickly as cash?

A lender doesn’t usually get to inspect a property before lending on it at auction, so it seems difficult to get a loan in a 24 hour timeframe. But many private money, non-bank lenders are set up to be able to fund such investment property loans quickly. With resources that allow these lenders to determine value and proceed towards a closing, financing the purchase of auction sales is an easy task for hard money lenders. For those not familiar with real estate auctions, I recommend finding a mentor or experienced partner to do your first trustee sale purchase. Particularly when using a hard money loan, it’s important to have previous experience in purchasing real estate via trustee sale.