The final installment of our three-part series with Adam Rappoport, talking about buying properties for cash at the trustee sales on the court house steps:
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
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Thank you so much, Adam and Jim, for this informative series! I wish you both well in your future endeavours! 🙂
Nice going Adam. Anybody is free to go down to the court house and bid. When the spread is 0-5% instead of 10-20 the flipper will not take a chance. Adam is the one that is taking the chance with the possible arm option explosion and the possibility of a world wide double dip recession in 2010.
The last time I knew a guy name Adam Rappopart he played beach volleyball in South Mission, rollerblader and had a good looking girlfriend. Nice going Adam. Good luck.
Nice job on the video.I think I am heading to the courthouse to watch some of the local action so I can see what goes on.
Thank you for providing this info, Adam and Jim. As mentioned in the previous posts – this is not for the risk-averse. But a 10-20% ROI isn’t bad for those with the cash and knowlege to do it. I don’t begrudge folks making a legal dollar. And since the transactions are all recorded, the trustee sales should factor into comps overall. Which is good for future buyers.
I was very interested to hear about the lien stuff. That’s the biggest factor keeping me from considering something like this. You should be careful with the judgement liens… if they involve taxes, a civil judgement that involved fraud, or if they were for child support etc – they do NOT dissolve, from what I’ve read.
JTR, This is an awesome series you’re doing – love the interviews. I am new to this and have a have a couple of questions. Adam mentioned handing a cashiers check over on the courthouse steps for the winning bid. Does this mean you have the check at the time of the auction for the exact amount of your bid? How does that work? Does the property have an escrow or are the owner when you walk away from the auction? If you could explain the process I’d appreciate it. I’d love to see a video of an auction at the courthouse…would explain a lot.
Isn’t it interesting that people with no money, no knowledge (see questions)or ability (except tapping a keyboard) throwing rocks at someone who has, and more importantly Is Doing it?
Recognize what this group is up to IS RISKY, VERY RISKY, especially in the current fascist market patrolled by sharks and no-goodnicks. Who amongst you has the money to gamble, the resources to back up a mistake or even an unforseen ‘long escrow’ or courage to do this?
I didn’t think so.
I would solve the tenant squatters another way than pay them $3-5K. Pick up a couple of Louisville Sluggers and hard-hittin enforcers and then go tune up the ne’er de wells.
That’s whats called an instant eviction. . .
Why not salute this man and his group? and Why not leave the heavy lifting to those with muscle?
Second Prize is Bankruptcy for most and a set of steaknifes that you can pick up down the hall by the ladies room.
As the man said “It takes Brass Balls”…
Jim,
Your best. Blogs. Ever.
Give a big thanks to Adam and thanks for this info.
Who wants to bet some of the auctioneers are on the take and and getting kickbacks from their preferred bidders?
Jim,
Consider videoing the live action at the courthouse steps. If Adam let you follow him around for some of his DD all the way to the bidding, now that would be interesting!
@Glengarry Glenross, comment #6.
If you evicted tenants the way you describe you’d be in deep doo-doo. Renters have rights in these situations. Typically they’ve been paying their rent, but the owner/landlord has been pocketing the $ instead of paying the mortgage. The cash for keys is the fastest way to get them out LEGALLY.
worm!!!
Yes I have not been down to south mission for about 15 years but good to see you here on line.
Also worm I run into Dougie down at the trustee sales as well. He works for a large Orange County player. Doug scopes homes for them and bids on homes for them as well. They are a power player.
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Both tenants and former homeowners have well protected rights after a foreclosure. These rights (especially for tenants) have been strengthened with legislation signed by Obama last May.
Being combative with tenants and former owners of foreclosed properties is not advisable. First off most of the former tenants have been victimized by absentee landlords. Second off, being an ahole to them will only keep you from getting the home. Recall our goal is not to hold property, it is to make a return. Cash for keys is the best way and as I said in the video, we try to help them find a place. If that means I call and talk to pms to get them in then so be it.
Also as posted earlier in the thread, this is incredibly risky and I would not advise anyone to do it. There are larger firms that are taking on investors and if people want in that is the route I would take rather then doing it on my own or with a few friends. Once more, we have been lucky. We do alot of homework and spend alot of time on this, but we have been very lucky.
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I am not sure that the auctioneers are getting kick backs. Could it happen? Yeah. I have heard of one questionable thing happen and it was a home WE were bidding on but I was not there, it was one of the other investors so I don’t want to disparage the auctioneer.
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3series yes you need to bring cashiers checks. You win the bid, you sign over the checks right there. (The checks are written out to you and you sign them over to the trustee). It takes about 10 working days and you get the trust deed in the mail. Also that is when you get any “change” from the checks you signed over. There is no owner and you walk away from the auction the owner, for better or for worse. Your next step is to go to the home and introduce yourself. That is when the fun begins. The process then becomes dependent on how things go with the person occupying the home.
UCGAL the lien stuff is what is trickiest like you said. We do as much lien checking as possible but there is never enough we can do due to time constraints. We have passed on many properties because of lien issues or jedgements we do not understand. Alot of time we are forced to do the sniff test. That is, if there is a property we love but nobody bids on it, then we may bail out. If we see the big boys bidding on some of them we like, then we generally know it will pass the sniff test….
Hope this helped.
Best videos ever. Thanks Adam and Jim.
Just one question, how do can I participate in the winning bidder betting pool and what the current odds on Adam?
I’m wondering what’s the best website for researching forclosures and pre-forclosures, Realty Trac or some other? For liens and encumbrances do you run prelim title repts on each property you’re interested in, or is there some other way? Thanks for great info.
Adam,
Since the “big boys” are there bidding on the same properties you are, aren’t you essentially committing yourself to smaller margins than they are to win the bid? If so, have you gotten a good feel for their comfort level, margin-wise?
I bought forclosures 35 years ago. Today it is a very different business! Then you could call the trustee the day before or the morning of the sale and find out if it was going or not and what the opening bid was and I don’t ever recall a bid less than the published bid. Not so anymore. They don’t answer the phone.
I very much doubt that the auctioneers are doing any funny business on the steps. I have recently been attending and have not seen any monkey business.
I am only looking for one or two properties but have researched several. The two biggest problems are:
1.The lack of known opening bids, ie lower than the published bid. On some you have advance knowledge on most you don’t.
2. Postponements.
I have watched one property since January, postponed every month, then last month cancelled and now this month a new NTS.
I tracked another property for several months, showed up every month and it was postponed. The published bid was around $385,000. This month I had a committment and could not attend. The bid opened at 203,000 and it went back to the bene.
That was a good deal and no one was looking.
If you are not looking at lots and lots of properties like Adam it’s even more frustrating and a time consuming business! Lots of going to auctions and sitting through an hour or more of postponements before the actual sales start only to find… postponed again, you’ll be back next month.
bubblenerd I was cracking up. As I said I am with two others and one of them goes to the El Cajon auction alot. I have been there with him a few times. There are like 5 or 6 guys, I am sure a few of them are realtors and they sit around this table with there dollars and they literally bet on each bidder. It sounds funny but they are well… pricks… there I said it… anyways I think we have only been successful once at El Cajon. Bad juju there for us. So don’t bet on us at any of the auctions unless you are betting on us to bail out.
3series we don’t use realtytrac or any of those sites. There are trustee sites that we go to like fidelityasap.com that give the sale dates. Yes we use a title company to help us out but they don’t run a full title report. If we did that for every property we would be broke. We do alot of the legwork ourselves and in some cases one of our investors goes to the county courthouse and looks up the information right there. Yes that is a pain in the ass but this stuff is all a pain in the ass. That is why those who think it is easy money are wrong.
tj yes your point is essentially true. However not all big guys stay through the entire day. It is a long day at the auctions and sometimes they get all the homes they want and leave before your desired home comes up. The main point of your post is true though, we have in some cases had to settle for a lower target margin. We got one the other day that I believe we overpayed on and will suffer a lower return because of it. There were like 9 bidders and the investor that went was not to be denied. She did not go full tilt but went over our “max” by a few thousand bucks. She is smart and each of us agree to trust the other 2. In some cases we have been a bit to pessimistic in our anticipated resale price on the open market so that is a pleasant surprise. By the same token like Corte Selva we have had to cut and sacrifice so the events balanced out.
I haven’t gotten the “good feel” that you refer to. However it depends more on the target market being acquired. For instance there is a certain complex in Rancho Bernardo that I know the demand is really really strong for. So I do know we can overpay for a condo at that particular complex and do okay. Same is true for a few other neighborhoods. However that is only true for a few very specific areas. Honestly I sweat every time we get a place and sweat until the check comes from escrow.
Gerryf you pegged it…. If we were only looking at one or two properties we would never get anywhere. Initially when we started we were absolutely confined to a few areas. As we learned through experience, exactly what you said was true and we had to expand our circle in order to make revenue quicker. So yeah we try to have at least 3 or 4 identified per trip. It is not always like that but I think the times we only went with 1 property on the list, we were never successful.
Adam,
Good luck to you and your team. I hear mention of CR, is that a blog or a forum site? Can somebody link me to it? I think it’s never any harm to read all you can about a subject
Adam and Jim,
Thanks for this insight. Great blog.
I’ll be bidding on Monday. 1295 going to auction, the most I have seen recently. One I have been tracking is going to sale and I just know that it is going to be sold on Monday! Adam knows how that feels, I am sure!
Gerry good luck. Depending on the trustee you may be able to call them but most of the time they will refer you to a website. One trick you can play is to try to talk to an operator and tell them the website is down. Then they may actually give you the opening bid. Maybe do this Monday morning at 10 or so to save you some time. If the trustee is NDEX get there at 10 because they start then. If not then get there at 11:30 or 12:00 because of the postponements.
Leithreas – google Calculated Risk Blog
This is great reporting, great information. Thank you Jim and Adam for sharing this with us.
SD Realtor
I noticed that starting schedule but did not know it was standard. Thank you for that!
I havn’t been to El Cajon in a while maybe 6 months. When I was there last, one sale was going on out and away from the table you mentioned. Maybe that is the NDEX guy.
The fellows around the table did not start until the other caller was finished..a nice touch. Same downtown.
Any idea which one in El Cajon does CR Services?
BTW I use Foreclosure Radar. It works for me. I see some of the big guys with different data sheets so they seem to use a different service.
Thanks for the response, Adam!
Awesome series. Thanks for letting us into the deal, Adam and Jim. Very educational!
Hi Gerry
I think El Cajon uses priority posting. Also the sheets you see the big guys use is probably county tax recrods research. I think that may be the url. I think the service is like 90 bucks a month. In El Cajon I have seen two guys auctioning at once like you mentioned. Downtown they don’t do that. The NDEX guy starts at 10 and then Jay takes over.