SOURCE: John Dixon & Associates

John Dixon & Associates

December 19, 2011 15:18 ET

Auctions of Bank-Owned Properties Offer Opportunities: How to Play It Smart

MARIETTA, GA--(Marketwire - Dec 19, 2011) - As banks continue to liquidate the large inventories of real estate they acquired during the economic slump, real estate investors face one of the best opportunities in years, according to John Dixon, whose company has auctioned almost 5,000 properties in 2011.

"Investors who focus on value are buying investment properties at a fraction of their former value. That's going to pay off for them not only in long term, but even in the near future, and folks are starting to realize that," said Dixon, president of John Dixon & Associates. "During the real estate boom, you couldn't turn on the TV without seeing an infomercial promising a secret formula to wealth through real estate. A lot of folks bought real estate at inflated prices, and much of that is now owned by banks. Folks learned the hard way that the time to buy is when values are down, and that time is now," said Dixon.

It's all about the math, said Dixon. "Let's say you buy an office building for $500,000. To get a 10% return, simply stated, you need to take in $50,000 in net operating income per year. But if you buy it for half that, it's profitable even at a lower occupancy level, or with lower rent prices. Then when the economy turns around and property prices start to rise, you've got an excellent total return."

Dixon offered this advice for investors who wish to buy bank-owned real estate at auction:

  • Investigate before you bid. "Visit the properties in which you are interested, and read all available documents provided by the auction company."
  • Have a clear plan to profit from any property on which you bid. "If you plan to lease the property, check neighboring vacancy rates and rent levels."
  • Have your financing lined up in advance. "Once your bid is accepted, you have a legal obligation to purchase the property at that price. The sale is not contingent on financing. So don't take a chance on getting your loan approved afterward."
  • Don't overleverage. "Many of the properties we're selling ended up being owned by the banks because there was too much debt on them. Make sure you'll be able to make your payments even if you can't lease or sell it as soon as you hoped."
  • Don't assume a quick turnaround. "While there are signs that the economy is starting to improve, it would be unwise to count on flipping a property for a quick profit. But in the long term, at the right price, real estate is nearly always an excellent long term investment."

John Dixon & Associates, based in Marietta, Ga., is a leading auctioneer of bank-owned properties throughout the United States. Individuals seeking additional information may contact the firm at 770-425-1141 or visit More auction information.

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