In this week’s episode we talk about making or losing Big Money with foreclosure auctions, and we’ll expose the truth about buying homes with “No Money Down!” along with other great tips for real estate investing. I’m Lucky Larson, helping YOU to keep it real….

So, today – finding properties through foreclosure auctions. First, there are several kinds of auctions. The main ones you will encounter are Tax Lein auctions – a topic for another day, staged auction company events, – another rant for a different show, and finally, Trustee Auctions on the county courthouse steps. Courthouse auctions are the most common and the ones with the biggest potential for making money or for losing your shorts. Courthouse auctions are not usually affiliated directly with the county court, but are “hosted” if you will, by a designated trustee appointed by beneficiaries or plaintiffs (usually banks) that have to go through this auction process on the courthouse steps as a part of formal foreclosure proceedings. You will see these homes listed as “REO” or Real Estate Owned by the lender. Sometimes banks do want or need to liquidate property assets and will set a price that really makes sense for bidders looking for a bargain. These auctions take place weekly or even daily in large cities. They proceed without much hype or fanfare and finding out (in advance) what properties will be for sale on any given day can be a challenge. The best thing a new investor can do is go and observe. The real question is, “Can you get bargains?” Yes! Some properties do sell at very good prices. I have seen some deals of 30 to 40% off of current market values. Please note that the winning bidder must give a large, non-refundable deposit or often pay the full price in cashier’s checks right then and there. Also, buyers are responsible for all other liens, taxes, delinquent HOA fees etc. so be sure you do your homework with a title company so you know what you are getting. It’s a high-stakes game but the rewards can be fifty thousand dollars or more on each property for just a few weeks work. There are many more details on my website: www.LuckyLarson.com

Today in our Minefield Mapping we reveal the truth about the infomercial claims of buying property with “No Money Down.” Can it be Done?!? Yes, and no. The infomercials make it sound like you can accumulate hundreds of homes without a single dime out of pocket. The important thing to note is that there usually is a down payment, just not necessarily with your money. There is always a limit to how much you can borrow and manage, especially if you are just starting out. Currently, with an FHA loan, Federal Tax Credits and state grants, a first time home buyer with good credit and a good income can quickly put together a no-money deal on a primary residence. For investors, that won’t be living in the property, a good no-money-down option is finding sellers that are willing to be the bank and finance the mortgage. Hopeful sellers with lots of equity are more likely to do this and you won’t have the strict qualification guidelines of a bank. Another common, no-money deal for investors is leasing, with an option to purchase, where no down payment is required for move-in, but instead can be accumulated over two or three years of lease payments. More details, cautions and examples of these things are on my website and in my books, but just know that you can truly buy homes, land and condos with none of your own money needed for a down payment.

For this week’s tip on staging a property for sale, “Start with curb appeal first!” It doesn’t matter that you have a beautiful kitchen if you can’t get the buyer’s in the door! If your home is butt-ugly, you will scare away most of your potential buyers and the rest will want a huge discount just for being brave enough to walk in the door. Most potential buyers look at pictures on-line with their agent to decide which houses they want to see in person. Ugly houses do not sell, or they sell for ugly prices, especially when buyers have a lot to choose from. Some paint and simple trimming and landscaping can put thousands of dollars in your pocket.

This week’s question comes from Hank in Kentucky. He wants to know: “What is a real estate tax lien sale and is that a good way to make money?” Hank, I assume you’ve been watching a lot of late night TV, when the infomercials take over the world. We will discuss Tax Lien Sales more thoroughly in our next episode so tune in for a complete answer then. The short answer to your question is that some states create a certificate to sell to investors that represents a delinquent tax debt on a property. The infomercials would have you believe that you can buy a tax certificate for a few hundred bucks and get a whole house! Nice marketing gimmick but it’s not likely. If you buy tax lien certificates you will most likely get a decent return on your money like 8 to 15 percent, but your money will be tied up for months or years and you do have to do your homework. Thanks for the question Hank and again, tune in next week for more details.

Next week we will talk about Tax Lien Sales and why infomercial hosts should all be drawn and quartered. We will also give you the inside scoop on one of the hottest real estate markets in the world. Till then, make your own luck!

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