As someone who has bought a number of properties "at the courthouse steps", I would highly recommend you work with someone who really knows the ropes.
The issues you bring up here are good ones... AND there is a lot more to consider if you really want to play. The fact that you say "prices are great" already raises a red flag. You think you see a $200k property for $12,000? Probably an HOA lien foreclosing.... with 2 loans IN FRONT of it that exceed the value of the property and you are responsible for?
Or maybe it's a 2nd mortgage that you are bidding on? Ooops... what about that $500k 1st mtg that is also foreclosing in another 2 months... on that $300k property.
You also mention "auction site". Sounds like you're referring to auction.com's new "trustee sale" service? There's a lot of issues with, shall we say, price accuracy & actual availability of purported auction properties.
Personally, prices aren't that great for the most part for at least a year now. You have big investment funds basically paying retail in cash and they don't care about tenants or the need to "recycle" their funds by flipping.
Their model is to sink the cash, collect rent, hold for 5 years or so, and then flip into a magically "stronger" RE mkt at that time. Probably will work out OK. Personally I think these "spreadsheet jockeys" are underestimating what a pain in the ass/cost managing single family properties is... but I digress.
If you have at least $500k cash to allocate for this effort, I would be happy to partner with you on Trustee Sale opportunities.
Bank owned properties can be found on sites: http://www.hudhomestore.com and http://www.homepath.com. These website list properties that have been foreclosed on are now ready to be put on the market at market value. Let me know if this helps you and if I could assist you with this process.
Depending on the city, you can find out the eviction process by checking the city rent board website. In order to get someone out in San Francisco- you or a family member would need to move into the property for a few years and would not be able to rent it to anyone else during that time.
There are bank owned properties called REOs that are similar to a normal sales- listed by Realtors and open to the public to view.
Everyone wants a foreclosure. You can see a lot of great deals online and if they look too good to be true they usually are. I would suggest that you meet with your Realtor or go to the courthouse steps and talk to the investors that are at the auctions everyday.
I would love to understand your reasoning behind your stated intention - I suspect you've been misled somewhere along the line!
If you're exploring purchasing at the county courthouse, here's a Foreclosure Auction Guide
Also go to Auction.com
Note that in many cases, properties bought at auction may not qualify for title insurance.
You'll see how-to-guides ther
You are looking at a Pandora's Box:
Foreclosed houses are sold at TRUSTEE SALES, which is also referred to as the Courthouse Steps. Usually, you can preview these houses with the help of a Realtor. They will be sold for CASH only! The will have gone through Foreclosure, so they should have all the LIENS taken care of; but not always, and you won't know until later.
The alternative is AUCTIONS which are handled by a private Auction company: These may let you arrange financing instead of CASH, but you probably won't be able to conduct Inspections, use any Contingencies, or protect yourself. These are the homes that they show on HGTV where the guys buy them, sight-unseen, and then open them up to find all the damage and problems inside.
And then there is the problem on the occupants; if the have a LEASE, then you cannot evict them until the lease is up.
You can do either, but both are real big Caviat Emptor!