The Auction

I attended a real estate auction the other day where they were offering up about a half-dozen properties, four of them I was keen on bidding on.

Two were rural houses, on large 1-2 acre lots, with plenty of privacy which I would have been happy to call home.

The other was a condo I thought maybe I could resell for a profit.

And the 4th, the one I figured I was most likely to win, was a small house on postage-stamp lot in the middle of a drab New England mill town. – No yard, crammed in between a bunch of multi-family buildings. Houses similar to it in its neighborhood sell for about $60k-$70k in good condition. This house was in a state of disrepair and not in the best neighborhood. So I thought maybe I could pick it up for $25k, put $10k and a couple of months work into it, and rent it out for $850/month or resell it for $60k.

The first three properties I was outbid on, as I figured would happen, and they all went for just over $50k. Fair prices, if I’d gotten one for < $30k it would have been a steal. Those guys will make some good money because, once those houses are fixed up, they are the kind of places people will pay over $100k for. Then this little house comes up that I figured I could win. And what happens? Two old guys, maybe in their 60's, get into a bidding war over the place. They were an auctioneer's dream. Looking at each other with contempt as each kept upping the other. It was a battle of egos to see who could be the bigger fool. I was disappointed when they got up over $30k, out of my price range. I was confused when they kept going up over $40k. And finally I was shaking my head in contempt as they got the thing up to a final bid of $58k. With closing costs and auction fees the purchase price would be around $62k. $62k???? For a house that, if fixed up, MIGHT sell for $60k or $70k? No wonder people keep telling me this is a hard business to make money in. It's full of these kinds of guys who figure they can make a quick buck with their retirement savings, end up losing their shirts, and then tell everyone they know about how you can't make any money in real estate. I'm trying to purchase my 2nd property now that my first is doing so well. I've got a few more auctions to attend in the comings weeks, so hopefully I will get something. I need to get myself a summer rehab project before my exam period is over in Mid-May.

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