Why vacant properties can sometimes equal great deals?
- It’s more difficult to locate the owners, which means less competition
- No curb appeal
- The house is not a priority for the owner
- The owner is tired of maintaining a vacant house and wants out.
- The owner is not capable of maintaining the house.
How do you find vacant houses?
1. Drive or walk in the neighborhoods.
The best way to discover a vacant house is to drive around and talk to the neighbors. The neighbors will reveal information that could be helpful to locate the owners.
If you are driving around, do it on a garbage collection day. That combined with the appearance of the house will be your first clue that the house is vacant.
To make sure we knock on the door and if no one answers, we look at the electric meter is it’s outside the house. If it’s not turning it’s a pretty good indication that the house is vacant.
While we are at the house we will talk to the neighbors and ask around about the house. Most neighbors will be happy for someone to take care of the house so they wouldn’t mind sharing what they know about the owner and the property.
2. Search online
Buy a list from a company that sells vacant homes data. We tested the Verified Vacant Houses only because we got a free sample.
The Stages of Foreclosure and How You Can Find Deals at Each Stage.
What happens after the owner of a property stops paying their mortgage is largely dependent on the state they live in.
There are two types of foreclosure: Judicial and Non-Judicial.
Example of a Judicial Foreclosure state is Florida, the lender has to file a lawsuit in order to foreclose on the property. During the 2008 crisis, it took almost 3 years for properties to be foreclosed because the courts were so busy.
In a Non-Judicial Foreclosure state like California, the foreclosure is done with the aid of a third party – a foreclosure trustee and it’s done out of court.
How do you find that a property will be foreclosed on in a Judicial foreclosure state?
The filing of the lawsuit is recorded in the public records as Lis Pendens (pending legal action). All you need to do is go the Courthouse or in most cases, search online to get the list.
Ideally, you want to find an owner who has a lot of equity and make them an offer.
Unfortunately, most homeowners being foreclosed owe more money than the house is worth, thus creating a need for a short sale. You can still get a deal from the owners but the lenders need to agree to receive less than they are owed.
For this to happen, the owner needs to prove that they have a hardship (lost job, bad health, etc)
Some investors are under the wrong impression that they can buy the house directly from the lender during this period. They can’t because the homeowner owns the house until it’s sold during a courthouse auction.
Courthouse Foreclosure Auction
Attending a foreclosure auction is quite entertaining but also scary if you are new to the process.
By the way, many auctions are done electronically nowadays.
Why you can get a deal at the courthouse foreclosure auction? Because you are buying house unseen and paying cash. No many people are willing to do that.
I hear many scary stories but they usually happen when the buyers have not done their research and in most cases, they don’t know what they are doing.
The way the auction in Tampa Bay works, you have to deposit 5% of the potential purchase price before the auction (a couple of days before to make sure your funds are available)
If you have a local service that does preliminary title search use them or you may end up buying a property that still has a first mortgage on it.
After you bid on and win the auction for a property you like, you have until next day noon to pay the entire balance in cash.
How can you finance buying at the court foreclosure auction?
JVs with other investors is a very common way to do this.
What kind of deals can you expect to find?
Currently 2019, you can still find deals at 30 percent of market value. During the 2008 crisis, it was 50 percent and more.
My best deal was a newer home that I bought at $80K, spend $8K to renovate and sold for $150K. That house would have made a great rental but I had partners in that deal so It had to go.
During the court foreclosure auction, the lender bids along with the other bidders. If the lender wants to take the property back they will bid higher and take it into their inventory (REO or Bank-Owned)
Real Estate Owned or Bank-Owned Properties
Usually, after a lender takes over a property, the next step is to list it with a broker. If the broker doesn’t sell it, the lender will list it with one of the auction sites like Auction.com and others.
These are foreclosures you can finance with a mortgage it doesn’t matter if you buy them at auction or not.