David's Macro Blog

Last week I interviewed John Ray, the largest buyer of foreclosed homes at the Maricopa County (Phoenix area) trustee sale auction.  Through his company, Bid AZ Foreclosures, he currently buys around 100 homes a month on behalf of his clients.

Listen as he shares his knowledge and experience on topics such as: getting a good deal on a foreclosure, the amount of research it takes to compete, the old boys’ network (main players) at the auction, and much more.

Note: there are 4 parts/videos of this interview, about 36 min. total.

Original post for your reference: Interview with John Ray: How to Get a Good Deal on a Foreclosed Property at the Trustee Sale Auction and Avoid Common Mistakes

Here’s a video of live bidding at the Phoenix auction:

Purchasing homes at the trustee sale auction has become increasingly popular throughout 2009 as the real estate markets have firmed. 

When there is a big enough discount in the purchase price of a home at the auction vs. its full retail price on MLS, real estate investors will buy the home to either flip (resale) or hold for greater appreciation down the road.

Jim Klinge (aka “Jim the Realtor”) of San Diego interviews Adam Rappoport (aka “SD Realtor”), a realtor and active flipper of trustee sale homes.  This is a very frank and honest discussion about the risks and process of investing in trustee sale homes.

Adam Rappoport Interview – Part 1 of 3

Adam Rappoport Interview – Part 2 of 3

Adam Rappoport Interview – Part 3 of 3

There is a lot of mystery and uncertainty about buying a home at the trustee sale: there’s no inspection period, deep pocketed buyers pay all cash to buy the property “as is” and “where is”.

The interview really gets into some insightful and insider details in parts 2 and 3 so make sure to watch all of the videos.

What surprised me the most was how the margins have shrunk this year. Notice Adam mentioned that his target margin was 20% per deal but now it’s down to 15% and the current deal was at 9%.

Another interesting thing is that every property he’s resold this year has had multiple offers because his group priced the home right.

What do you think about this interview? Please comment below.

During our last visit in Scottsdale, Amber and I toured 3 houses purchased at the Maricopa County trustee sale auction in October 2009.

You can watch all 3 videos below.

Related Posts:

• Tour of Trustee Sale Homes in Scottsdale, AZ
• Real Estate Investors “Making a Killing” at Trustee Sales! about Jim the Realtor’s video and comments about trustee sale homes and industry professional Jonathan Mann in San Diego.

True investors want to purchase an asset at a discount to today’s fair market value. In the past, this was a big challenge for real estate investors. However, now that we are in a real estate recession, investors can finally purchase houses for significantly less than “today’s retail price.” One method to do this is at the court house steps through a trustee sale auction.

Watch the video below from my favorite realtor, Jim Klinge (aka Jim the Realtor).

Apparently Jon Mann, San Diego real estate professional investor, purchased this home yesterday. As Jim says Jon has been “on fire” buying 20 to 40 homes a month “just making a killing.”

Note: We’re doing something similar in the Phoenix market with our friends. It’s (finally) an exciting time to invest in real estate!

ABC news presents – Bargain Homes for Sale with Bruce Norris  [5 minute video]

Bruce Norris, a well known Riverside, California real estate investor was on ABC’s Nightline. 

This is one of the few examples of professional real estate investors being part of the solution to the current market crisis.  Finally, main stream media portrays investors as something other than “vultures.”

His cost basis in the property is pretty good.  About $100k invested with rents of $1100-$1200.  Thus the monthly rent is greater than 1% per month of the home’s purchase price.  Historically the 1% rent ratio is difficult for investors to obtain in California.   In fact when I invested in Texas real estate (lower priced), 1% rent ratio was considered good.

By the way, Bruce mentioned going through trustee sales was a good way to buy houses for investment.

For those of you looking to rehab and then rent or flip houses, here are some notes I took regarding Bruce’s renovation choices.  Note that he has purchased over 1000 homes for investment.

Norris bought a basic 3/2 house for only $55k in California plus improvements (costing $38,000), which include:

• Granite counters (remember when only millionaires had these in their homes)
• New solid wood kitchen cabinets
• Neutral paint, with white paint on trim and ceiling
• 12” tile in walk ways and kitchen
• New stainless steel appliances

During the real estate bubble, investors were part of the problem because they increased demand for housing, pushing prices even higher.  Now in the bust, they can be part of the solution for the excess housing inventory.  Otherwise, these beat-up, empty homes would be left to rot in neighborhoods across the country.