[tuantran02]

This question goes out to the veteran flippers. I notice there is a shortage of inventories on the market. I want to know what is the most productive ways with current market to acquire properties for flipping beside buying off the market. Should we go back to bandit signs, cold calling, divorce listing, etc?

[AmotoXracer]

I always did really well with bandit signs and some simple adds in the local newspaper.

[Natalie-VA]

It depends on what you mean by "most productive". The fastest way to pick up a house is probably foreclosure auction. I bought most of mine that way over the years; however, those are not the most profitable deals. I think the most profitable deals come from direct mail, but it will take you awhile to establish steady inventory that way.

--Natalie

[John_Corey]

Natalie raises a good point. When ever someone asks for the best way to do something they might be trying to narrow things down too much.

Why market or conduct business with only one way of attracting sellers? You could take the view that any method that produces a profit is a method worth continuing with. Rather than picking the one method that happens to be the most profitable continue with any method that works. If you lack the time, look to hire staff or otherwise outsource the work.

As Natalie mentions, some methods take some time to get working and therefore it is best not to let them die off just because something else is working. Keep your name out there and track the results religiously.

[jimingersoll]

The hard part about the auctions is finding the best deals where the bank doesnt bid them up too high. I think the deals are there but it could take a lot of time finding them.

For me bandit signs continue to work the best and the cheapest price, but also direct mail is always steady on responses. I bought house last week off a bandit sign that I purchased for $70k below assessment.

I think being diligent in marketing efforts and doing 5-10 things consistently pays off.

Jim

[John_Corey]

Originally Posted by jimingersoll

The hard part about the auctions is finding the best deals where the bank doesnt bid them up too high.
...

Jim

Jim,

What do you mean when you say: "the bank doesn't bid them up too high"? I would expect the bank to open at the amount they are owed plus other costs. The bank does not bid as much as they open at a price.

Are we talking about different things?

[Natalie-VA]

John,

The bank does not always open at the amount they are owed. That's one of the reasons that auctions are so time consuming, because you never know what the opening bid will be.

--Natalie

[John_Corey]

Natalie (or anyone else),

The lender foreclosing will open. Assuming we are talking about a foreclosure, are there any situations when the opening bid is more than the lender is owed (plus all the legal fees, etc that the lender can collect)?

It is my understanding that anything bid above what is owed the lender will go to the next lien holder in line with any surplus going to the borrower who is losing the property.


Second question. Lender's can open at less than they are owed. Who knows what happens if the opening bid is less than the lender is owed and then the bidding rises until the winning bid is equal or higher than what the lender is owed? I would expect there to be no difference. Until the lender who is foreclosing is made whole any bids over the opening bid will be paid to the foreclosing lender. In other words, an opening bid that is low could still result in the lender being paid in full.


If I am allowed a bonus question, can a foreclosing lender enter more than one bid? They open. Are they allowed to bid again if they feel the property is not going for enough and they want to bid with the chance they will win?

I know banks are not allowed to own real estate that is not required for current operations so I would not expect then to be allowed to bid as they really can not afford to win. It would be a regulatory violation as they would be 'investing in RE' and continuing to have an OREO on the books.

[AmotoXracer]

First questions answer - No.
Second - Correct. No difference. Happens frequently.
Third - Yes, they can, and somtimes do bid untill the full amount of the debt and fees is reached.

[John_Corey]

Natalie,

Assuming you agree with the responses to my questions (see below), why is there a concern about wasting time at auctions?

Other than auctions are unpredictable by design, is there something else I am missing?

Originally Posted by AmotoXracer

First questions answer - No.
Second - Correct. No difference. Happens frequently.
Third - Yes, they can, and somtimes do bid untill the full amount of the debt and fees is reached.

[Natalie-VA]

I do agree with those answers. One of the reasons a lot of time is wasted is that auctions are very competitive. You will RARELY be the only bidder.

The main reason is that you can research 50-100 houses in one week with no results. When I say "research", I mean you've done due diligence on the computer and driven by the house. That doesn't include the time to drive around to the various auctions/trustee sales. After doing all of that, most of them will be cancelled, and the majority of the rest will come up with bids that are too high.

I happen to like going to auctions, but there is a LOT of wheel spinning using that method.

--Natalie

[tuantran02]

A lot of investors have great results from bandit sign. I'm starting to go back to them. Haven't received any phone calls yet but a few bird dogs. Regarding to mailing, what area has the best results (etc NOD, NOT, FSBO).