“So, do you guys wanna know how you should be buying foreclosed homes in New York?”
There was a big cheer and then a hush fell over the audience. All eyes were on the speaker, including my own. A friend had invited me to the monthly meeting of his investment club in Brooklyn. It had been two decades since I was a member myself so I was curious to see how the scene had changed. I was also intrigued by what the guest speaker had to say. And I bet you are, too.
I won’t keep you waiting; instead, not only will I share what the speaker had to say, but I’ll also go one step further and share how I personally find and buy fixer-uppers in New York City. Trust me, my method blows the speaker’s resources out of the water.
Three Resources for Buying NYC House Foreclosures
There was a lot of anticipation in the air that night at the investment club meeting, so I expected to hear some really great tips on how to find local real estate investment deals. While I imagine that most investors in the room have heard about at least some of the speaker’s ideas, there may have been a tidbit of useful information for some. Here’s what he had to say:
1) Online Search Portals
Online search portals like Zillow and Realtor.com, according to the speaker, can be a fantastic way to find cheap, foreclosed properties across the city. Head over to Zillow right now, search for foreclosed properties in Brooklyn and you’ll see over 4,000 foreclosed homes for sale. Many of these will be agent listed, but there are also properties up for auction, too.
Sounds promising, right? That’s until you start trawling through all of the listings to find a decent property. Trust me, that gets real old real fast. Zillow’s data isn’t always kept up-to-date, either. In fact, only about one-third of the New York City properties on Zillow are listed within five percent of the sale price. That means you could spend hours trying to find the perfect property, only to find out that you got your hopes up about a seemingly well-priced investment property and that it was an error or already sold.
2) Lender-owned Properties
Most major banks and mortgage lenders have numerous foreclosed properties on their books at any one time. In Brooklyn, for instance, you can bid at the foreclosure auction through the Kings County Superior Court to acquire a lender-owned house. Many of the houses up for auction have been neglected or vacant for long periods of time, so you may be able to get an investor-friendly price if your strategy is to buy, renovate, and then sell at full market value.
A word of warning, however. Banks are well known for their bureaucracy and buying a bank-owned property can be a long, tedious, and drawn out process that also carries some risk. Nevermind all the rules and paperwork involved, you may not even be able to take a good look at what you are laying your money down on until after escrow closes. In addition, you’ll also likely face stiff competition from other investors who, like you, are hoping to find the deal of a lifetime. In the end, you could walk away empty-handed despite all your time and effort.
3) Government Agencies
It’s not just banks that own foreclosed properties, several government agencies do, too. A government agency could end up owning a property if the homeowner defaulted on a government loan used to finance the property or failed to pay property taxes. Buffalo, New York’s Tax Foreclosure Auction is one resource that the speaker mentioned as a top choice to buy foreclosed homes. With a minimum bid of just $500, it seems like you can’t go wrong.
However, there may be some hidden liability when you buy from the auction. In Erie County, for instance, you could get strung up paying for back property taxes. That’s because the auction referee will use the sale proceeds first to pay the costs of the sale then to cover anything owed to the county. If there’s any money left, the referee will direct sale funds to pay back taxes. However, if there’s not enough money from the sale to pay those taxes, it will be on you to take care of it.
How I find and buy distressed properties
I personally don’t use any of these resources that the speaker touted to find investment properties in New York City. As an independently owned and operated HomeVestors® franchisee, I leverage the widely-known and trusted “We Buy Ugly Houses®” national brand to advertise my real estate investing business. As a result, I have a steady stream of distressed owners calling my office to ask for help.
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