Auction Buyers Take Note

Auction Buyers Take Note

Most likely you have clients who buy distressed properties from time to time--with the intention of making a profit--and need a source of funding to fuel their activities. There are three common ways to buy distressed properties: pre-auction, auction, and post auction (generally referred to as REO). Most investors are forced to buy either pre-auction or REO because they lack either the cash or a mechanism for financing properties in an auction scenario (due to the logistical challenges involved). Pre-auction purchasing is frequently difficult and frustrating due to the high level of competition and the inexperience and often skittish emotional state of the potential seller. REO purchasing is often equally frustrating, as institutions tend to be slow and seemingly irrational in their decision making processes. Seemingly the best way to buy distressed properties is at auction, and those real estate investors who have a working fund tend to indulge in doing just that. Still, most investors find that from time to time they hit the wall so to speak and are unable, due to temporary cash limitations, to make an attractive buy.

More and more frequently we at Fairfield Financial are being approached by auction buyers wishing to reload their working fund in order to be vigilant and standing ready for the next good opportunity that comes along. We can move quickly to place a loan on one or more of your existing projects (7-14 days to close), and with no pre-payment penalty you are not locked in; this is consistent with a sensible philosophy of working to turn properties quickly, realizing your profit, and generating further working capital.

Our loan guidelines vary from loan to loan, but generally fall within the limits described below:

Region Oregon, Washington, and Idaho

Loan Amounts $10,000 to $5,000,000

Interest Rates 10-15%, depending primarily on credit, LTV ratio, and property inspection

Term of Loans 1-5 years

Amortization generally interest only

Broker Fee Typically 5%, but may vary based on particulars of the loan

Other Fees $500 document preparation fee

Pre-pay Penalties None