Date Posted : 2010-01-23 | Category : Finding Real Estate Deals | Comment : No Comment
This is a great article on finding great deals using tax sales.
It does not matter which one you choose as they all end up the same way, for the most part.
The first thing to do is attend one of the sales without buying anything. The reason behind this tactic is to personally see how things are done in that county at that type of sale. Be sure to take notes of any questions that you may have. These questions can then be answered by hanging around and speaking to one or more of the investors who actually did purchase one or more of the properties auctioned off, or by speaking to the officials afterward who conducted the sale. The latter might have to be done at a later date.
What really happens is that most of the time you are simply giving the homeowner a loan by paying the county taxes for them to the county. The county is actually selling you their "lien" on the property. It is up to you to know the foreclosure process that must be adhered to in order to actually possess the property. This usually entails a period of time in which the homeowner can repay the county what you gave it plus an amount of interest as required by law. This total amount of money will be sent to you (or given to you) when you complete a "release of lien". You now have your money back with interest (the amount is predetermined by state/county statutes).
If you are not paid back within the "redemption period" then you can foreclose, using the power of that lien to then claim the property as your own. Some states/counties will do this for you and in some you must not only go through a foreclosure process similar to what is happening to many of today's homeowners, but you also may have to evict those that are there (if anyone is).
You now own the property, and since all tax liabilities go along with the property (not the owners of the property at the time of occurrence) you now also have the responsibility to pay any and all property taxes owing for this parcel of land that have not been paid. If the reclaimation period is for more than 1 year, then you just may find out that this property that you purchased the lien on is included in the next years tax sale. Therefore, after purchasing the lien it would be in your best interest to pay up all the back taxes as soon as possible. Be sure to give a copy of that paid receipt to those officials that conduct the sale. In most areas they will add this amount to what the homeowner has to pay to reclaim the property. You may or may not be receiving any interest collected on this added amount.
Only after the redemption period is over, and you complete the foreclosure process, are all liens against the property cancelled (if there are any besides yours). This is where the real benefits come in. As you can imagine, the taxes on any property are a usually much less than almost any other way to purchase a parcel of land, except when the back taxes owed are for several years. With that said, it is up to you to actually find out everything about this property before you purchase it at one of these tax sales as it is almost always sold "as is". Which is to say that they can give you the information about the property that they have but will not guarantee in any way that that information is currently true.
If you purchase a parcel, then go look at it and see it needs to be "winterized", or windows fixed, or doors replaced, etc. and you do this to "protect" your investment there is absolutely NO guarantee that you will recoup any of that money spent for doing so. This means that you must be patient, very patient, so as not to spend any money that you may not be able to recover. As a matter of fact since you only have a lien against the property, you can be actually charged with "breaking and entering", or "illegal entry", or "trespassing" by the homeowner or a suspicious cop. This could be true even before you purchase the lien while you are doing your due diligence to see if you want to bid on the property.
The risks are very great and the rewards are decent (interest) to very, very good, for those who are patient enough, and lucky enough to actually obtain the property free and clear for such a small amount. You now have full rights to do anything (within zoning and code laws) that you want to with this property. So good luck and good investing.
Please be very careful, as this post cannot conceivably cover the entire pros and cons of doing such a deal. There are really too many different ways things can happen that it is not really possible to "walk someone through such a deal". I hope that I have covered most of the possibilities and/or probabilities for everyone.
Just make sure that state/county officials or their “authorized representative” conducts your tax sale. Not by someone who has purchased several tax liens and are selling their rights to them in a "tax lien sale". This is often a nightmare and why I suggest that you actually attend the tax sale at the city/county/state site. I do not participate in one that is online, even though some counties do conduct their sales online.
Date Posted : 2010-01-21 | Category : Short Sale | Comment : 6 comments
Found this great post today on ShortSaleArtisan.com
If you are pursuing short sales you will find this useful.
1. Pre-list on eBay. While eBay has become a household name and is frequently used to drum up interest in short sales, it is also a time consuming headache fraught with problems for short sale investors. Homeowners routinely screen listings and are likely to take issue with price variations especially once their relatives begin telling them how it is worth so much more. Be prudent and use eBay with caution.
2. Playing Nice with Bad Lenders. It’s essential to separate the good from the bad when it comes to lenders and obtaining financing. Don’t even think of playing the role of investor until you have all your ducks in a row when it comes to finance.
3. Making a Stupid Offer. Really, it’s done all the time. Have an escape clause in place especially when just getting started so you can kill your offer without having to lose face or a lot of cash. Better yet, have several contingencies in place but keep them realistic so you don’t frighten away other stakeholders.
4. Selling to Everyone. The world might be your oyster but it’s not your target audience. Know your market and make sure the message fits to maximize results. Know the needs of the homeowner, broker, agent, appraiser and all others then make a point of giving them exactly what is required every step of the way.
5. Fake it Till You Make It. Seriously, you are not as fly as you think. Take a step back to determine what you really need to succeed otherwise, you risk ruining your reputation before it has a chance to take flight. Arm yourself with the right process, the right people and the right property before you sign on the dotted line.
6. Assuming Dates Don’t Matter. Everything is time critical when it comes to short sales. Get it in writing, get it on time and deliver by the dictated date…always.
7. Irrational Exuberance. Don’t spend money before it’s in your account. Don’t forget the taxes and whatever else you do…don’t fall in love with any property.
Date Posted : 2009-11-08 | Category : Selling Real Estate | Comment : 3 comments
How can you get rid of bad real estate investment in today's over sold market?
What can you do if your deal turned out to be a dud? Sometime it happens to the best of us. There are a few cures that can help you ease the pain or stop the bleeding so you can move on to your next project.
1. You can take a promissory note from your buyer for the part or entire purchase price. If your buyer can give you a sufficient down payment and you can negotiate dissent terms, you will be able to turn around and sell your note to a note buyer to get your cash back.
2. If you are wholesaling your property to an investor who will rehab and resell it, you can structure a note with no payments due until he resells it.
3. If a deal turns out to be too thin and there is a lot of work, you can partner with a rehabber to whom you are selling your property. Your contribution to the partnership is your property and his is materials and work. Once the project is complete and the property is sold to retail buyer, you will spill the proceeds.
4. You can attempt to sell your property for what you paid for it or even take a little loss. It’s always better to recognize that you’ve made a bad investment, deal with the problem and stop the bleeding as early as possible.
You should always remember when you make your offer; you have to include enough room in the deal for someone else to make a profit. Don’t be too greedy, you’ll always loose out in the long run.