All Forum Posts by: Matt Stewart

I've bought several properties through different auctions.  

Cons:

You don't get access to the property so you're taking a much higher risk not knowing the condition of the inside.  The basement could be full of water, foundation issues, or there's mold on every wall.  The property may be occupied and it will be your responsibility to gain access and get the occupant to leave.  There may be liens or judgements against the property that will take time and money to get cleared up.

Pros:

Less competition than on listed properties and potentially more profit.

Bottom line, I wouldn't recommend it for a beginner.  Once you've got some experience and a team in place ready to handle whatever rehab nightmare you might encounter then you can consider the risk and reward of buying an auction property sight unseen.  

Bear in mind most home inspectors are generalists.  They know a little about a lot, or a lot about just a few things.  Many of the inspections I see from buyers of my properties have phrases in them like "looks like possible mold, recommend further inspection by a qualified professional" or "roof may be nearing the end of it's lifespan, recommend a certified roofer do further inspection".    So it's CYA 101, but are they really telling you something that you couldn't have figured out for yourself?  Unless you find a really good inspector who is experienced working with investors and distressed homes you're better off walking through with your contractor and saving $400.  

Once you know the big things to look for (foundation, roof, hvac, electrical, etc...) you'll be able to walk through a property in minutes and have an idea of rehab scope and cost.

@Holly S. When I started in 2007 the market was much different. You had dozens of REO's coming on the market every week and not many were bidding on them. Multiple offers were a rarity and you could put in lowball offers all day long until you found a good one. I was very fortunate that the mistakes I made in the first couple years didn't hurt me too much because I was able to buy so low.

It's a much different market now.  Competition is fierce, margins are thin, and your risk tolerance needs to be higher.  It would be real easy to lose money on a deal now if you made just a few mistakes. I think in order to get started now and be successful over the long term you need every advantage you can get.  And if you're not partnering up, find a mentor or someone with experience you can get advice from.  Use every resource you can come up with.  

@Neddie Smith  You may get a few different ideas from people on here because everyone classifies areas in their own way.  I would consider certain, but not all areas of Pickerington, Canal Winchester, Blacklick, Gahanna, Reynoldsburg, Grove City, and Westerville to be solid B areas.  These are all suburban areas and there are certainly some inner city areas that would meet that criteria also, but you can go from a B to D in a matter of a couple blocks in some places.  You really need local knowledge to be sure what you're looking at there, whereas the suburbs is a much safer bet for an out of town investor.

@Rick S. Currently I'm working with a few money partners on JV deals. The split varies depending on different factors. As long as you structure it so both parties are getting what they need it works out great for everyone. I've got a very simple JV agreement that defines very clearly what each parties responsibilities are, and what the split is. Try to anticipate any disagreement or gray area that might possibly come up during the process and get it on paper ahead of time.

Obviously you're extending a certain amount of trust to the other party when you're getting started.  On my end that means constant communication, documentation, and lots of photos.  As for my partner I'm looking for someone to do exactly what they say they're going to do when they say they're going to do it.  And up to this point the partnerships I've made have been very lucrative for both parties.

@Guy Kriz  There are definitely deals to be found in Columbus, but with the market as hot as it is now $50-80k is going to put you in a C or D class neighborhood most of the time.  I'd start with 43227, 43213, 43207, 43206 zip codes.  There are certainly others, but that will get you a good list to start from in the price range you're interested in.  Then get some local boots on the ground.  Good luck!

@Amit Friedlander  Franklinton has a lot of potential.  But be cautious and get some local knowledge.  There are certain areas that are very hot, but just a few blocks away you could find yourself in a very rough area.  Don't just assume anything with a 43222 zip code is going to be a great deal, because it could be far from it.

Hey @Ryan Deeter It's tough in central Ohio right now, especially for new investors without an experienced team in place. MLS deals are very few and far between. My advice is to look where others aren't looking or find a niche where you hold an advantage over other investors. Good luck and feel free to reach out if I can help you out getting started.

@Dave Charron  In my market I've always had an easier time selling a 3/2.5 than a 4/1.5 and I've added a master bath wherever it's possible.  It seems like there's more buyers who would appreciate a master bath than those who need a 4th bedroom.  Comps will be your guide, but I'm guessing the buyer pool is bigger for those wanting that master bath.

@Daniel Porter  You can start by looking for the county recorder's website where the property is.  I'm not sure if it's offered where you are, but here we can do a search for public records through the website.  It allows you to view liens, deeds, judgements, etc...   It doesn't take the place of a proper title search, but if it's available and free you may be able to use it find some initial info.