Newbie Stupid Tax - How Much Does It Cost? How Much Will You Pay?

Question

Answer

I wouldn't even consider that as "losing" $1,000. Rather, you invested $1,000 in an inspection, and that investment paid off handsomely as you were able to walk away from a potential money pit. You spent $1,000 in order save God knows how many tens or hundreds of thousands. Sounds like a pretty good return to me.

Answer

Above I wrote, "I bought a house from a guy who was in pre-foreclosure. I let him temporarily stay in the house because he said "he was going through cancer treatment and needed to be close to the hospital and didn't drive." Not only was that nice of me, but terribly Stupid, In addition, I bought the house using a "Quit Claim Deed".This it turned out, was a disaster.I bought the house in March 2001 - he sued in Oct 2006 claiming he never signed the Quit Claim Deed. That is over 5 years later. It started a chain of events I will outline that shows how Stupid Tax adds up.Lesson: Really, really understand the differences between Warranty Deeds and Quit Claim Deeds

Answer

I had a guy recently tell me he forgot that the IRS likes to get their share. That cost him a pretty penny and a couple of properties. He has the tax owed, fines and interest. Youch!Lesson: Calculate IRS costs into your equation

Answer

@Anthony Gayden You were smart on that one. You won, you came out ahead, you did the right thing. Sorry, that one wasn't Stupid Tax. ;-)

Answer

I've been doing this for a while. Think I know what I'm doing. I own about 1000 units and seem to be buying something new all the time I just made a blunder that'll end up costing me 7 figures. Ouch. Moral: you're never done learning.

Answer

@Cody L. Sorry to hear that, buddy. But you make a good point.

Answer

@Neil Sinha I can help you through that one. You have to make multiple offers of course and get back on the horse you were bucked off of. I would recommend though that if you choose to use a real estate agent (I don't use them myself) but if you do, there truly is the 80/20 rule. Only 20% are making a living at it and that's who you want working for you. I choose to buy "off market" since it gives me more profit and more control.@Ashley Cote Structurally, I avoid houses that have foundation problems. I avoid properties I wouldn't want to live in the location, (crime, high power wire over head, near a toxic zone, fronting a highway) I keep to 3 bed 2 bath that are in blue collar neighborhoods with everyday people. That is the biggest market. You can get on Redfin.com and put in the zip code you are interested in to see the listings for your area. If Redfin doesn't cover your area, try Realtor.com, Zillow.Com or Trulia.com

Answer

@Anthony Gayden @Tyler BrownHere is a sample of what I am talking about:I bought a house from a guy who was in pre-foreclosure. I let him temporarily stay in the house because he said "he was going through cancer treatment and needed to be close to the hospital and didn't drive." I agreed to let him stay for six months while he went through treatment. (Later during the lawsuit, my attorney would tell me how Stupid that was to do.)When I came back by a few months later to check on him, my new unwanted tenant, he was pulling out of the driveway, driving his car. I followed him a couple of miles where he stopped in front of a house. Turns out a group of family members were having a BBQ and he was yukking it up. I started watching him more closely, he never went to the doctor or the hospital. Ever. At all (I found out in the lawsuit.)Lesson: No matter how nice you want to be, you have to separate the seller from the property or they will play you to the hilt and the court will ask why you did that. It is *your* fault. As an investor, in some jurisdictions, you are guilty until proven innocent.

Answer

I'm in the category of "never get started" stupid tax currently. I joined a REI group recently so hoping to get some good information from there. I think the biggest thing I don't know is what to look for in property yet. (What structural pitfalls to avoid, what signs that tell the location will not be ideal, etc.) I'm at the stage of trying to learn the market and what houses are going for. My goal is to house hack, ideally duplex/triplex but it seems those are rare in this area so I may settle for SFH.

Answer

Got the REI itch over 10 years ago after reading Rich Dad, Poor Dad, and signed up for the $8K Rich Dad Coaching program that boiled down to a bunch of Kiyosaki branded books and tapes and a weekly call telling me to find a local RE investor that is doing a bunch of deals and learn from them (wait, I thought that's what I paid the $8K for, was to learn from you). Then, while I was building my professional team like the coaching program instucted and was hungry to find a deal, any deal, the mortgage broker I had met said he had an off market deal. Seemed one of those beat up houses with a motivated seller like I saw on TV, so I executed a sales contract with him and paid an earnest money deposit directly to the seller. Turns out he had signed an earlier sales contract with his next door neighbor with a specific performance clause in it, and she filed a lis pendens to enforce the sale. I was out of luck. Soured me on trying again for a long time, and I've only recently started my education back up and tried to get into the game.