Real estate investing typically involves watching the market for options that would make excellent rentals, from a condo in a highly-sought-after part of the city to a single-family home that’s in an ever-expanding suburb. Savvy investors know that there’s another way to find ideal rental properties: by monitoring real estate auctions, you can find good prices on homes that need a little care, as well as turnkey properties that are ready to be rented out right away. Because purchasing via real estate auctions is a more fast-paced way of finding and acquiring properties for your portfolio, it can be easy to make real estate investment mistakes if you don’t do your homework beforehand. Here are a few things to know before you go.
Know Where to Find Real Estate Auctions
Peruse your local newspaper to see when auctions are being held; they’re publicized there all the time. You can also find real estate auctions by searching the internet.
Remember, Different Auctions Have Different Rules
Before you head out to a specific auction, research it to learn about its individual rules. You’ll need to register and submit financial documents beforehand if you plan on bidding on a property.
Research Properties First
Look through the foreclosure data in your target area to see which properties will be featured at auction. Some counties offer this information online. A real estate investment advisor will also be able to guide you in finding potential properties. While you won’t be able to tour a property that’s in foreclosure (as they’re typically occupied), you can drive past it and take a look at the area in which it’s located to get an idea of whether it would make an ideal rental.
Understand the Nature of Real Estate Auction Sales
Auction real estate properties are sold as-is. Sometimes, they’ve gone into foreclosure because the owner has run into financial difficulties. In some situations, this means that the home will have deferred maintenance items, repairs, and updates that will need to be addressed before you can rent it out.
In other cases, the home may be in perfect turnkey shape. This is why driving by the property and taking a look at the exterior is helpful. While it won’t tell you exactly what’s going on inside, it can give you an idea about the general upkeep of the property.
Have Your Finances in Order
Real estate auctions are fast-paced, with closing typically happening within 30 to 45 days. If you put in a winning bid, you’re expected to have cash in hand and be ready to buy or have your financing already in place. You need to make sure to include the price of the property, as well as closing costs and auction fees.
Find Someone to Manage It
Auctions aren’t only great for potentially finding excellent deals on turnkey properties that are rental-ready or properties with lots of potential that need a little updating. At times, you can even find “income-producing” rental properties that come with tenants already in place. These are a great find for real estate investors who are eager to begin generating passive income from day one, rather than waiting to find a tenant.
The good news is that even if the auction property you purchase doesn’t come with a tenant, you can work with aproperty management company to market it, screen tenants, and get a lease signed as quickly as possible. In addition to this, they’ll manage the running and maintenance of the property for you. By taking advantage of the prices offered by real estate auctions and then employing the services of property management experts, you’ll soon be generating monthly real estate cash flow without having to be a full-time landlord.