Buying at the auctions in Maricopa County at the court house or trustee's office in Phoenix has evolved into a true 3 ring circus and a game of cat and mouse. Hundreds of properties are either auctioned, postponed, cancelled, or go back to the bank each and every day. The process is not for the meek of heart with $10,000 at risk if you are a successful bidder and 24 hours to pay off the balance.
Inexperienced individuals that want to speculate on this type of investment should proceed with caution or work with a organization that has a system in place to minimize the risk that is involved. We have seen many people purchase properties that are either overvalued, have clouded titles, need extensive repairs, etc.
The systems that have proven successful use methods of evaluation that are very conservative and allow for market change and corrections will enable the real estate investor to make great profits. In 2008, majority of people were screaming at the top of their lungs that flipping properties was not possible and that investors would be throwing their money away. From 2008 through 2009 the investors that adhered to these techniques earned huge returns. In 2010 the word must have gotten out and the investors crowded the courthouse steps to scoop up the foreclosures. Again investors found themselves in a situation that needed to be tweaked to be competitive and not overpay for properties. There are investors that are paying 10-15% too much for properties because they listen to these wholesale shops that blue sky the value on properties.
Your motto should be to "Buy low and sell Lower than your Competitors"...in this market the competition is mainly bank owned properties. For example If there was a private sale at $275k and four bank owned sales at $250k than the home is worth $250k. So as long as you can buy the home low enough that after holding costs, fix up, commissions, etc allow enough room for a good profit than you should make a bid for that property. In addition, to running conservative comps smart systems also require that the investor physically look at the property and understand exactly what repairs need attention. No matter if the property is occupied or not the investor should always attempt to get into the home (legally) to do a visual inspection. If this is not possible the real estate investor should make their evaluation from an exterior inspection but will add extra room for unseen repairs. The real estate investors may make some bids without physical inspection if it is a drop bid and the margin is huge, but should not be practiced on the majority of their bids.
Most of properties are occupied when the investor purchases from the auctions but this shouldn't hinder them form bidding on the home. In fact, if done correctly the occupant will usually move out on their own accord and have not had to take them through the eviction process.
Depending on the experience of the investor we are able to assist with the flip from initial evaluation, to fix up, to the sale of the property. The more We have been doing this long enough that our contractors will work at lower profit margins since they know they will make up for it with the scales of economy.
