Foreclosure property and eviction

[Tania Ghosei]

Hello, I just started here and I am already learning a great deal about real estate investments (and the challenges!). I just won a foreclosed condo at an auction and are now in the process of transfering the title. The condo is still occupied by the previous owner (who lost the property because she failed to oay for HOA dues). In any case, the plan is to evict the previous owner, renovate the property and put it out for rental. All this in a matter of 2 months as HOA fees kicked in already and they're high! Any guidance on how to expedite the eviction process? Anyone has done it in DC without hiring an attorney? Thanks! Tania

[Jim K.]

@Tania Ghosei

If you get involved in auction buys going after occupied foreclosures looking for the big score, you have to have deep pockets for contingencies like these.

Your plan to get the eviction AND subsequent renovation AND showing AND closing done in a whirlwind two months with or without an attorney in a city like DC isn't particularly realistic.

But this is how I would try: show up at the door and offer cash for keys. A LOT OF cash. And be prepared for a pit bull to be set on you or a gun to be waved in your face. IF by some miracle they accept the cash and actually do relinquish possession, you get in there as soon as possible with a reliable GC who's willing to renovate the place in January.

Then you put it on the market, reaching out to just as many agents as you possibly can. You're aiming for a sale in late February, early March, not the best of times.

1. The chances that the former owner will break through the fog of despair and confusion surrounding eviction and take the cash and go away are LOW. They just lost their home. They're not in the best frame of mind.

2. The chances that you'll find a general contractor to handle a renovation cheaply enough to make you money on this deal straight out of the gate in January are LOW.

3. The chances that you'll get buyers who want the condo and are willing to offer a quality price for it so early in the year are LOW. The chances that their financing for it will be unproblematic are LOW. The chances that you'll get the closing wrapped up nice and neat and quick are LOW.

What is most likely to happen is that you will end up in a protracted legal battle with the former owner with an unsympathetic judge and that will take months to wrap up. By then it will be summer, the busiest time of the year for contractors. You will only be able to find people in your price range who promise a lot and deliver very little, and they in turn will resent dealing with a new investor with no hands-on understanding of the process of a major renovation. Those contractors will string you along for six or seven months until you finally get rid of them, all the while with holding costs running and running. Maybe by the fall you will bite the bullet and pay someone real money to get in there and do what needs to be done, and they'll finish somewhere around November (because they'll have the demo the hack work the other contractors did). You will then put the property on the market in December, and only get piddling offers that will not equal what you put into the property over 2019. You will lose money on this (hopefully you have the minimal resources for it not to bankrupt you) and for the rest of your life you'll tell anyone who listens that real estate is just a bad, bad, bad investment strategy.

You jumped into a very tight, very difficult, very high-risk niche specialty without studying it carefully, without having worked with a more experienced investor, without a network and a team in place, without giving yourself a real chance to go through the learning curve. There's a price for that, and it will now be demanded from you.