All Forum Posts by: Barrett Dunigan

To further what @Sam Leon was saying, you could also distribute your 401k to a traditional IRA and from there transfer a set amount of funds to an SDIRA. I've done this myself, and then used my SDIRA to purchase a triplex. As @Dmitriy Fomichenko noted, you miss out on depreciation.  I like the idea of buying notes with a roth SDIRA.  That's on my hot list to try next, followed close behind with a solo 401k.  Tons of threads to read on this subject here on BP.

@Daniel Dietz 

Financing is available for your SDIRA. I was able to do this for the purchase of a triplex. It needs to be a non-recourse loan, and the lender has to be able to accept the loan being made to the SDIRA, but their out there. Typically a higher LTV due to the non-recourse aspect and may only be a fixed rate for a certain period (say 5yrs with mine), then the rate becomes variable. In my case it is amortized over 25yrs. Just more to analyze when you model the income/expenses.

Thanks @David Krulac 

and @Steve Babiak 

Both properties were removed from the list prior to the sale.  Doesn't mean the owners are out of the woods, so I plan on trying to approach and see if there can't be some sort of deal there after all.

My triplex had the First Alert OneLink already installed when I purchased a year ago.  They are wireless, combo smoke/CO2, and have the voice alert.  They will still beep if there is a low battery (hasn't happened, but that's what I read in the manual).  I'd be interested in hearing about lithium, but think I might be leery of not changing a battery for that length of time, and not sure of the cost benefit (may be similar to LED lamps at this point, sounds great, but the costs don't support the expense yet).  These are expensive, but not compared having to hardwiring smokes.  My township allows these as an alternative as they communicate as one, just as they would if they were hardwired.  Bottom line- I like them so far.

Only issue I've come up against recently is a nuisance alarm, but I believe that was potentially due to dirt in the detector.  I vacuumed and used compressed air to clean and they been fine since.  I now keep an extra on hand in case one goes bad.

@Dennis Hughes I think you are getting ahead of yourself with the thought of running title searches on all the properties. Before understanding title, I would want to know which of the properties on the list are truly investible (depending on your risk appetite). This would mean starting with Google maps for the 30,000 foot view, and then a drive by the property to see if it is occupied and its condition. This will also help you understand the area and potential ARV (look at realtor.com and Zillow for comps of homes sold in the area). Next steps would be looking on the websites of the County Prothonatary and Recorder of Deeds. This will provide more information terms of lien holders and interests in the property. It's worth doing a bit of due diligence on your own, and you need to break down the list to something manageable. From there you can get a title search on the properties you are most interested in pursuing. Good luck.

I've been reading the forums a bit on the subject of Upset Sales in PA and thought I would try to tie several of the discussions together for the upcoming sale.  For this I'd also like to invite in two main contributors of previous like topics to this conversation:

@David Krulac

@Steve Babiak

(can't get the links to work for some reason)

Since I haven't attended an Upset Sale before, I am considering just going to see the process, but also know a couple properties that will be part of the sale.  That said, I understand the following:

• Complete a Title search and visual inspection (as possible) on the properties to understand any other issues.
• Register for the sale.
• If successful bidder, I would be responsible to pay the bid amount, transfer tax, recording fee, and deed prep fee.  First question- Is the transfer tax based on the appraised value?
• I would become owner of record after Deed has been filed (4-6 months from what I've seen), but also understand that PA has issues in terms of the length of statute of limitations for adverse possession, and insurability of the Deed. 

I'm interested in two of the properties on the Montgomery County PA Upset Sale list as they are in my surrounding neighborhood and am actually a casual acquaintance of the Owner (which may not be a good situation, particularly if I were the successful bidder).  One property is the residence of the owner.  Taxes were half paid in 2012, nothing in 2013, and 2014 has no record of payment.  There is a mortgage attached to this property from 2004 that is substantially less than the appraised value.  It has not been satisfied or assigned, but there is also no lis pendens on the property.

The second property of the same Owner is commercial.  The taxes are in the same situation as the residential property.  It had a mortgage, but is noted as being satisfied in 2009.  It is part of a larger building and I am not able to assess whether it is in some way a condo, and if so, are they up to date with any fees.  The balance of the building is owned by relatives of this owner and occupy one of the storefronts with their RE company, for which this owner also works (as an appraiser for one thing). 

So if you are like me, the hair on the back of your neck stands up with that info.  I am interested in the residential property as it is an eyesore in the neighborhood.  The old saying of buying the ugliest in a great location fits this property, but after reading other posts I know there will probably be difficulties with gaining clear title from an Upset Sale in any sort of timely manner.  A flip doesn't seem to then be reasonable, but best to look at it as a buy and hold.

Question is...is there another way?  Do we look at this as an opportunity to try and convince the Owner to sell?  To add to the intrigue of this situation, the Owner has recently (June) purchased another residence in another township in the county (found as part o my Due Diligence), so they may be looking for an exit strategy for the property listed on the Upset sale.  We are late in the game for this years sale, but I am also thinking the bank may step in and pay the lien on the residence, allowing time for discussions with the Owner.  From what others have posted, banks step in all the time, but to me that doesn't end the opportunity.  Why try and go through all the issues surrounding an upset sale, when you may be able to go through an actual purchase?  Since it's not a tax lien sale, but a deed sale, we are ultimately looking to acquire the property anyway.

One thing that I do need-  a good RE attorney with knowledge of Deed sales in PA, hopefully Montgomery County.  Please pass along any names or PM me.

Thanks for listening if you made it to this point.

@Loren Whitney does the UBIT occur whether your funding from a traditional IRA or a ROTH? I understand the UBIT consequences of having a traditional SDIRA acquire a loan for real estate, but didn't know that this also applied to the purchase of a business. Thanks for the info.

@Dion DePaoli and @Bill Gulley -I was starting to get the two of you mixed up in these posts. 

To further the thought of regulators looking at Mortgage Servicers is an article from todays paper where Ocwen Financial had to re-state earnings.  Taking a deeper look, it is under intense regulatory scrutiny, but mainly over transactions with affiliate companies.  What would be interesting is if through these regulatory reviews, a number of Sub2s are uncovered.  Considering Ocwen is the 4th largest mortgage servicer, it's certainly possible.

Just furthering the thought of triggers, other than rate change.

I used Lending Tree once, years ago. Simply a broker offering different companies the ability to lend to you that you might not know of otherwise. You will still need to meet all the criteria (income, credit score, equity, etc.) Depending on the LTV you are looking for will dictate the cost (rate) of the HELOC. The only issue I had was that I was quoted a rate that the lender changed less than a week prior to closing. Be sure that you are aware of this and that you don't need the funds immediately. This way you can go somewhere else if need be.

There have been a number of posts on BP related to using a HELOC as financing that you should look through. Bottom line, as with any investment the numbers need to work and you need to be prepared if something goes wrong to repay the loan and not put your home in jeopardy.

Since my initial use of Lending Tree, which I paid off quickly, I now have a HELOC through the same bank that I have my mortgage. You may want to look into smaller, local banks that you can develop a relationship with, particularly for any future lending needs. It will still mean meeting their criteria, but sometimes easier to have an ongoing discussion, rather than being a number on an application.

Reading your subject line, I am assuming it is the sink plumbing we are specifically talking about here.  I have seen it where tenants have stuffed the cabinet below the sink full of items, to the point that it has damaged the piping.  There will be denial, but it is pretty clear.  Your PM should be able to tell you if this is the case.  If not, I would worry about your PM having the ability to properly fix the issue.  Either way something else is going on, but that doesn't mean replacing all your plumbing.