Auctions

[NREI]

New to the real estate investing game and wondering if newbies should buy properties from auctions.  I live in Philadelphia and our housing authority is having a huge auction soon.  Just wondering if buying at an auction is worth it to get your foot in the door?

[andydallas]

different auctions have different rules,

do you get an inspection period after winning the bid where you can retract your offer without penalty?

Buying a property without an inspection period is for experienced investors and I would not recommend it for a new investor, I won't do it myself.

Just make sure you understand the rules of the auction

andy

[NREI]

Unfortunately, there is no inspection period. You have to bid and buy at the same time. You can't go inside the house you can only see the outside.

[justin0419]

Are the addresses listed in advance?  Can you go drive by the properties?  It would be risky enough as a sophisticated investor if you couldn't see anything inside...as a newbie, you could get yourself in a world of trouble.  You might be able to see enough thru the windows of these places to tell you it was worthwhile to bid or not.  You would have to get it really cheap though.  You wouldn't be able to determine if HVAC worked, how old the wiring is, etc.

[andydallas]

there is a house across from one of my rentals thats going up for auction (along with many others) in the next few days, its a nice looking house in a great subdivision.

I have looked at the house, and made an offer on it last summer, but someone else beat me out.

The house has been back on the market for about a month, but what you couldn't see by looking in the windows is that the foundation, which needed work before, now has reallly gone away, the center of the house has fallen about 3" since I made my offer,,,even my foundation guy is scared of the house, saying we will break every pipe when he fixes the foundation, and it probable should be torn down.

If you look in the windows the house looks nice,,,this is what scares me about no inspection auctions

[justin0419]

Yeah, you Texas guys have foundation concerns more so than a lot of other places.  Isn't it the clay that moves and separates from the rest of the ground?

[NREI]

Yes, I do have the addresses in advance but they are all boarded up properties so I can't take a peak in the window.  I guess I'll leave this one to the seasoned investors.  Thanks everybody!

[andydallas]

justin, some areas are worse than others, I know one area that the joke is the 'make ready' includes paint, carpet and fix foundation between every tenant,,,,,,I have managed to avoid that particular area,,,but if you want 'a deal" you can get one,,,

[lauraalamery]

Buying at auctions is not for the faint of heart. You also need to make sure you have the financing lined up and you need to know how to deal with the whole process.
Make sure you go to the auctions first as a spectator, learn from the pros, come up with ways to round up financing, and you should be ok.
Also you need to learn how to perform due diligence as much as possible (there are tips and strategies for this as well.)