If you have seen professional flippers on television programs purchase a distressed property at a foreclosure auction, and ask yourself, why? It is because a foreclosure auction presents an opportunity to potentially purchase property at below-market value thereby resulting in higher profits.
This has led many people, especially those who are relatively new to flipping properties, to ask– can I get a hard money loan to purchase a property at a foreclosure auction?
Answer – generally, no. Hard money lender in Orange County cannot directly fund a property purchase at a foreclosure auction. This is because a hard money loan must be secured against a piece of property you already own. Hard money lenders in Orange County, and throughout California, will not simply write a large check for you to use to bid on a piece of property at an auction in the hopes of being the winning bidder. Generally, in order to secure a hard money loan against a piece of property, the transaction needs to go through the escrow process.
Title Insurance
Another roadblock to using a hard money loan to purchase a foreclosure property at auction is the fact that hard money lenders require you to purchase title insurance to ensure that there aren’t existing liens on the property. Generally, title insurance is not available for properties sold at a foreclosure auction.
Foreclosure Auctions Require Liquid
During a foreclosure auction, the winning bidder will provide a cash payment; hence, it is obviously important to be prepared and have sufficient liquid (i.e. direct access to cash). If you show up to a foreclosure auction with a credit card or loan documents, you are wasting your time as they are not permitted.
Ways to Purchase Property at Auction and Utilize a Hard Money Loan
For example, if you have enough cash to purchase a foreclosed property at auction, once the purchase is complete, you can then apply for a “cash out refinance” hard money loan. This enables you to purchase the below-market-value property while also enjoying the benefits of a hard money loan to help move forth and complete the project.
Have Questions about Securing a Hard Money Loan for a Real Estate Investment? Contact the Highly Reputable Hard Money Lender in Orange County Today
At PB Financial Group Corp, we have been providing quick funding since 2006 and have funded over 2000 hard money/private money loans helping our clients with valuable property acquisitions, development, bankruptcy discharges, probate resolutions, and so forth. For further information or to schedule a consultation, please contact PB Financial at 877.700.3707 or visit www.CalHardMoney.com to learn more.
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