Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.

Today's question comes from Jayco, I believe that's how you pronounce your name. Uh, he says, Hey Marco, this is Jayco from Indianapolis. Thank you so much for your good information that you bring to us for free. I want to buy properties at foreclosure auctions at the county sheriff sale, but I don't know how to finance them since they want all the money up front. If you have any suggestions I will greatly appreciate it. Well Jayco thanks for the question.





Simple one here, but things to consider. So how do you finance a foreclosure that you purchase at the County Sheriff's sale or any courthouse steps for that matter across the country? So this is true in pretty much every state. Um, there are judicial, non judicial States. Often, it's a trustee that's selling the properties that are have been foreclosed or taken back by the lenders in the non-judicial States and in the judicial States.

They are typically done by, well often the trustees at the courthouse steps. You just have to check your jurisdiction, but how do you finance these properties? The answer to that question is you typically don't, so if you don't have the capital for it, and most people don't walk around with tens of thousands or hundreds of thousands of dollars in their pocket. Although I did know one individual who actually did that, you will have to finance it with your own cash or friends and family or other people's money. Essentially it's private money meaning non-institutional money. You have to accumulate these funds through your own efforts through friends, family, other investors or partners. It's all private money. Now there are people out there that want to lend and will lend under the right terms and conditions. If you know what you're doing and you're providing them a favorable return and it is backed by that real estate, meaning that they have a lien on it, like a first lien position for the monies that they're lending to you.

However, a lot of people are going to be pretty reluctant when it comes to foreclosure auctions. They're more likely to want to lend you capital if you're purchasing it through the MLS because you have the ability to do more due diligence. And I'll get to that in a minute, but first, ask yourself why you want to buy a foreclosed property? Is it because you want to buy, fix and flip properties and create yourself a flipping business, essentially a transactional business where you are flipping property to create chunks of cash and then you take those chunks of cash and you reinvested into other properties that you buy and hold in a portfolio that you own? Or are you looking to equity buying a distressed asset, fixing it up and essentially creating or forcing equity in that property where you're essentially putting in the sweat equity to create the equity in the property?

And there's nothing wrong with that. It's just, it requires certain skills and tolerances and team of people and an understanding of how it all works and it's doable. But there are a lot of moving parts and it can be stressful and sometimes there's a lot of brain damage and I've done many of those. I've probably flipped close to 300 properties since January of 2015 I don't do that anymore. I pretty much have gotten out of that. It was just too draining and stressful and a lot of brain damage, a lot of moving parts and getting ripped off by contractors and on and on the list go. So there are a lot of negatives, if you will. And I'm not saying it's a bad thing, it's just not for everybody. Just understand who you are and understand what you want and your risk tolerance and your resources and your level of knowledge and the people that you would have on your team and what you would be doing.

So again, full circle, it goes back to the whole question of why, ask yourself why you want to buy foreclosures and make sure you understa...