All Forum Posts by: Byrne McKenna

Hi Tom, I did not see any posts that mention "Payment Standard". In Colorado, we also have the HUD FMR but each PHA will publish its own Payment Standard and Utilities Standard for what they are willing to pay on a voucher. Naturally we push the limit to the point that the Housing Specialist might request a small adjustment to meet the calculations. Each PHA is different. Search Payment Standards in NJ or your area as a starting point. Timing is also important. Generally you want to request it on their annual recertification date. Always with 60 to 90 day notice depending on your state.

XCEL Energy user comments appreciated! The tenants power was shut off for non-payment and I need to put the account back in my name.

Recently my HOA sent me photos of my rental townhome with a gas generator running in the yard and the electric meter missing and shorted out. There is substantial damage to the electric inlet and panel. I immediately posted a 3 day termination notice for a substantial lease violation. I just filed the eviction in Jeffco. Then I drove by the property and it looks like the tenant is moving out. Thats not surprising since there is no electricity or hot water. I may be getting this property back sooner than anticipated. The court date is the 22nd and I might get a default judgement if they are a no show.

So the real question is what to expect from Xcel. I’ve called several times and I can’t get a straight answer on the turnover. Is there any legal obligation to pay the unpaid utilities? Damages, I presume, with no limits? Thank you for your ideas and experience.

• Byrne McKenna

Hi Branton,

In my case, the US Treasury was guaranteeing the deed.  In the end, I did decide to buy the title insurance.  In Colorado, I doubt very much that you could redeem such a property.  I also did my research and I knew that the prior owner went to jail for mortgage fraud so I was not too concerned about that.

There were no restrictions on this purchase contract - it was extremely short (2 pages) compared to our standard state form agreements.  I have purchased other foreclosures, probably Fannie Mae, that have a 3 or 6 month restriction but not on this deal.  I would recommend you read everything carefully.  If the US government guarantees title without restriction, that has to be worth something.  They spent months settling millions in mortgages before closing so it did require patience.

With respect to using the property, again, I would read their requirements carefully.  In my case, all three buyers did keep the property for a year or more.  5 years later, I am still renting mine and it has increased 3 x in value.  Good luck on your bid.

Byrne

Self directed IRA's in real estate seem very restrictive to me. Lot's of rules and not flexible in the cash management portion of the account. In my current situation, I am obsessed with getting the IRA money back tax free. I am considering withdrawing under the irs 72t exception to avoid the 10% penalty. Then I would use a HELOC to buy another property so that the loan P&I would roughly equal the early annual distribution. The net result on the new property should yield a small paper loss for the tax return thus lowering my overall tax exposure and shielding the IRA withdrawal from income tax. Thoughts on this strategy? (I am retired, age 56 with 7 rentals, no debt, small tax exposure, several IRA's)

Hi Stacy,

I have not completed this deal yet but I would encourage anyone to consider Treasury Auctions. My general impression is that they are less competitive than foreclosures on MLS. As you know, they are few and far apart. I just picked up on it in my local paper. My impression was that they will hold and bundle them in a region - ie, once a year in Colorado is an estimate. At "my" auction, there was around 15 registered bidders plus 5 employees of CWMS - the marketing arm of the Treasury to bid on the 3 condos in the same complex in a mountain town, 45 minutes out of Denver.

You can find details of the terms and conditions online.  They are very fair in my opinion. The answer to the title question is that they will provide a title commitment as proof of a clear title.  The buyer is responsible to purchase that title insurance.  The government has their own designated title company locally.  This will result in around $1500 in closing costs where we normally expect around $200 for a cash purchase in Colorado.  

You are probably most curious about competitiveness of the pricing. All the properties and bid results are published on line. That data did not make that much sense to me since it is so regional. In our case, my research showed previous complex sales around $100 to 105 in the prior year and the current market pressures have pushed that up - maybe 10%. We won the better of the units for $75. All three condos went for the same +/- 2%. There were 4 or 5 serious bidders for the 3 units. Terms required bidders have a $5000 cashiers and written contracts were prepared on site. I is very hard to find a deal like this currently around Denver on the MLS.

One observation is that not everyone does their homework before bidding - HOA's, repairs required, needs a furnace, etc. etc. For that reason, I would say anyone who has done their market research and can do a good rehab takeoff can do well here.

Contracts require a 30 day close. Initially we were told it could be a week. In our case, the title commitment had a long list including $3 million in liens by the government, banks and the HOA. I am hopeful we close this month. Like any long term vacant unit, we are now dealing with a toilet flooding and proposed Seller's concession.

Hope that helps.

Byrne

Matt:  Sorry for the delays as this story unfolds.  This $75k condo has $5M in liens.  The govt has to clear this and it could be mid-January to close.

Byrne

Thanks Matt.  I will provide an update on this property after we close next week.

Byrne

Wayne, Bill,

Thanks for the feedback!

Byrne

Hello BP members,

I just bought a condo in Colorado at a US Treasury Auction.  I would be interested in any feedback on any personal experience regarding closing with the US government. Is title insurance necessary?

The terms of sale state that the government is responsible for any liens and encumbrances on the property.  We are assuming a government deed will be issued and recorded.  In this case, why consider title insurance?  

We are free to select our own title company. In this case, it would be $800 to split if no title insurance is purchased. The government's title contractor (out of state) said they would do the closing for $1500 to me with insurance. When asked what if we do not choose title insurance, the reply was that the government's agent CWSAMS in VA would do the closing presumably at no cost.

Thanks in advance.  About me - I own 10 properties, mostly residential, mostly rentals, mostly foreclosures, only cash in Denver metro Colorado.

Cheers

Byrne McKenna