I only caught a portion of an infomercial this weekend so I’m not sure that I caught the whole gist, but I believe it was about buying foreclosed homes for as little as $300! etc. This probably doesn’t include the assumably huge amount of property tax that has accrued on the property, but what’s the straight dope on it? Is this the same thing as the property auctions held on the courthouse steps? None of those properties sell for less than 10s of thousands and some/most? have to be demolished anyway. Maybe the $300 homes that they were talking about are in Nebraska…?
I saw the first few minutes of this infomercial the other night. You pay like $29.99 for this guy’s videos which explain his “system” for buying properties at government tax auctions for very little money. Then it flashed photos of all these decent-looking houses and the price paid for them, like $300, $500, etc.
It explained that these are properties that are repossessed by the state/county/town because the owner did not pay taxes, and that the government’s right to tax trumps any loans or mortgages. Anyway in these auctions, the county will auction off the property for just the amount of back taxes owed.
The whole thing strikes me as bullshit. If someone owed a mere $300 on a house, do you really think the county would repossess it and sell it for that amount? The chances of that really happening seem to be so tiny.
I think most of these extremely cheap properties are probably in really really poor and dilapidated condition. And the examples they gave on the commercial were the few that looked OK. I think it is extremely misleading.
My grandmother used to buy forclosed and reposessed properties as rentals. She got some great deals, but never as low as $300.
Nor are they usually nice properties. Let’s face it-- folks who can’t afford to pay their taxes usually don’t have a lot of money to go towards upkeep. Often, grandma would put quite a bit of time and cash into making it livable again before she could rent it. As an example, I remember that she once bought a two-story brick Victorian for about $30,000, and put around five thousand into fixing it up, even doing most of the cosmetic work herself. Regardless, once she was done, the property paid good rent every month, and when she sold it, she got nearly triple what she had paid for it.
One of the more well known infomercial hawkers, Carleton Sheets, has been convicted and spent time in prison, for violating fraud laws, in Florida I think. These people operate on the very edge of legality. There was a TV magazine that did an expose’ of their paractices a few years ago. I recall that they interviewed some of the people who had appeared in infomercials claiming to have made big bucks using the particular “system”, all were paid to appear and none had made any money in real estate using the plan being promoted.
Always remember the old adage: “If it sounds too good to be true…”
While I agree in general, remember that shite happens. Friends of mine owned a home in Pittsburgh, a mobile home in Indiana, PA and some property in Pennsylvania somewhere. They decided to up and move to Florida on a whim.
Once in Florida the couple had marital issues. A small home equity loan taken with the home in Pittsburgh as collateral was ignored by both of them. They lost a $300,000 house over a $2,000 loan. Weird but true.
I also read an expose on Carleton Sheets a few years back in Reader’s Digest. The upswing is: he doesn’t really make his money from real estate. He makes his money by selling his program, and then selling the customers “support” when they can’t make the program work. When they still can’t make it work, he keeps insisting all they need is more “support” and more “training”, which of course, costs them more money. By that time, they’re into him for thousands of dollars, and would feel foolish quitting if only a few hundred more bucks will solve their problem. Lather, rinse, repeat. He is a huge scam artist!
Having said that, you certainly can make money buying real estate relatively cheap, fixing it up, and reselling it. But of course, if it was as easy as the commercials make it seem, everyone would be doing it.
(2 points)
-If someone has great advice that is worth selling, people will go to him.
If his advice is worthless, he will go to the people.
-If someone is selling advice that will make you rich, it is more likely they got rich selling the advice, not using it.
It was many years ago, but a friend in grad School bought a house for $1000. It was part of an “Urban Homesteading” program where they were trying to reclaim the Inner City. The catch was that you had fixer-upper that you really had to fix up. I heard about houses going for as little as $400 under that program.
But with inflation and all, the prices would be higher today, I’d think. I suspect the infomercial was something very different.
And to fix up that home took a LOT of work.
My FIL buys some houses at auction. He has many of them now but there are some huge catches. The strong housing market means that there is still a lot of competition for even the most terrible properties. Developers make up a huge portion of the attendees and they know a good deal from a bad one and have the financing to move on something they like. You can get some good deals but the savings is usually surprisingly small. 20% off of the current market value all things considered would be an incredible find these days.
You only get a very short period of time to evaluate the property, all of the financials that are up against it, make a decision for your top bid and then follow through right away. The first public showing until the gavel drops is often 72 hours or less.
The big catch is that you have to have cash or financing lined up as soon as you win the property. That means that you need a checking account with several hundred thousand dollars in it, know real estate cold, and be very decisive.
Don’t forget location, location, location. I just read somewhere (was it last Sunday’s NY Times magazine) about a town in NW North Dakota that was so desparate for people, they were talking about giving abandoned homes to people who would move there. Prefereably people who had young children and who would do nothing to disturb the somnolent community that remains. Then there are places like inner-city Detroit. I see no reason why you couldn’t get a house for next to nothing in a sufficiently depressed area and you don’t have to go through an infommercialist to do so.
There are about 20 properties listed for $1 in Indianapolis, but I don’t know if those are typos or what. The lowest ‘real’ price I could find in Indy is $8500
I have a nephew (early 20’s) in Pittsburg who has about as close to no money as you can have who has been able to buy properties in Homewood (of the 88 neighborhoods in Pittsburg, he tells me, 25% of all murders take place in Homewood) for under $10,000. He puts a couple of thousand more into them then rents to folks whose rent is paid by the state/city.
He’s hoping to have 60-80 units in a few years. When he gets to where they can make him a living he plans to find a college somewhere where he can teach French Literature.
Yes, you can become very wealthy if you buy slum properties for cheap, fix them up, and wait for the neighborhood to rejuvenate. This happened in the South end of Boston-30 years ago, you couldn’t GIVE away houses there-there were abandoned buildings and vacant lots. The turnaround started about 15 years later-now its one of the hottest areas in town. But, a huge risk-will Newark J turn aound? Maybe, but I would not bet on it!
Don’t bet the farn on it!
First you pay a pittance for a “come on” video.
Then he sells you the study course of how it’s done, etc,*
He makes his* living (fortune) selling you information on how you can make your fortune in real estate or the stock market or ???
Not far from forsaken (NYT, Reg req).