Investor nets $87,000 in about 90 days
Although he had never purchased a foreclosure property before, Michael Collins knew exactly what to do when he attended an auction for a bank-owned (REO) property in his area.
“I bought your (RealtyTrac’s) eBook on buying REOs so I knew what to expect,” said the Lodi, Calif., resident. “The auction was at the house, and it was kind of quiet, just a half-dozen people there. It was pretty much just like the book described. … The book had prepared me to go to the auction.”
The REO eBook, written by longtime foreclosure investor and trainer Lance Young, also prepared Collins to submit a winning bid well below market value, make some targeted repairs and resell the property for a big profit.
“I was pretty much 30 percent below market value on it and had to put very little into it to flip it,” he said, noting the repairs cost around $10,000. “After fees and everything I made $87,000.”
“The whole process for me was probably 90 days,” he continued, admitting that not all property flips are that quick, especially now that appreciation rates are slowing in his area and in many parts of the country.
Because he bought at a bank auction — not a trustee sale or sheriff’s sale, where cash payment is often required — Collins was able to get financing from the same bank that sold the property. And because the bank was eager to get the property off its books, he was able to close escrow about 15 days after the auction.
Collins said the RealtyTrac eBook provided him with comprehensive and accurate information about how to purchase and flip an REO.
“Everything that was written up in the book was exactly how the thing worked,” he said. “I didn’t feel like I was going in blind. I felt like I had some understanding of what to expect.”
As a subscriber to RealtyTrac’s national pre-foreclosure and foreclosure property database, which maintains a daily updated list of pre-foreclosures, auctions and bank-owned properties, Collins was able to purchase the eBook at a discounted price. The REO eBook he purchased is just one of a series covering all foreclosure-buying opportunities, including how to buy directly from homeowners in default, how to buy at trustee and sheriff’s sales and how to buy from a bank.
Collins believes successful investors in the current market will have many opportunities to find properties below market value, but they’ll need to be willing to hold properties longer and rent them out rather than flip them. But he doesn’t believe lack of experience with foreclosures should hold investors back from pursuing those properties.
“I would tell them to do it. Actually it was a really easy process,” he said. “I would do it again.”