All Forum Posts by: Chris Schwartz

Thanks for all the great input. Right now I have enough to close the deal at 25%. However, the property is in need of additional repairs and putting 25% down is going to leave me strapped for cash. I always have the option of borrowing the required funds from my 401k, but would like to avoid this if at all possible.

The property is being offered through HomePath and I have heard of some deals only requiring 20% down when going through HomePath lenders. Does anyone know if this applies to four family investment properties?

Hello,

I have recently found what I believe to be a good deal on a four family residential property. I am planning on purchasing as an investment property and NOT using it as my primary residence. After talking with a number of lenders, its seems my only option for conventional financing is to put 25% or more down (giving 75% or less LTV). Has anyone had any success putting less money down on similar investment properties?

Thanks,
Chris

Thanks for all the input. Great stuff guys.
@Jerry K.

@Jerry K. Have you found that there is less competition for land? It seems like land lots may not get as much attention at auction. I am also guessing that repossessing land lots is less of a headache (and cheaper to foreclose?) than trying to take over a home that may have tenants or an owner living there? Since my goals to try to collect as much interest off the liens as possible, not get a cheap house, I am wondering if this is the route I should go.

@Ned Carey Thanks for the response. VERY helpful stuff.

It seems that Illinois has a lot of counties that do "SEALED BIDS" where you can simply bid your best offer by mail. That may be helpful in my situation. I am going to keep researching.

Thanks again guys!

@Brandon Turner Brandon, thanks for responding. After making it out view the property I was able to get some pictures of the plumbing issues. I posted them at http://postimg.org/gallery/8bhe1jkm/70ad0e55/

@Chris Masons This property's drain system seems to be a similar setup to the fourplex you are describing. The repairs would be required to by the city to pass inspection. From the documentation I received, the inspection requires "(1) soil stack and (2) kitchen stack to be replace"

@Matt Devincenzo Thanks for advice. That's likely what I'll have to do before moving forward. After viewing the property, it does need a lot of cosmetic work. The plumbing is my biggest concern cost wise though.

Any thoughts as to what a worse case scenario may be cost wise for the plumbing? If my estimates are correct, the house is listed about ~$30k under ARV. Most of the windows also will need to be replaced soon. I am just trying to get a good feel for a margin of safety on this one when structuring my offer.

I have found what I believe is a fairly good deal on a fourplex in my area. The fourplex is nearly 50 years old. I just received the seller disclosure and I am trying to get an idea of what the repair costs are going to be.

Here are the causes for concern...

- 10 year roof (undocumented, so may be older...)

- 1 soil stack must be replaced

- 2 kitchen stacks must be replaced

- One unit has water damage to the tile floor and tiled walls. Seems as though owner just laid laminate flooring over the top of the tile and put a fiberglass shower over the tiled areas. Disclosure says repair could be permanent if venting is added.

- Kitchen sink in one of the areas must be reglazed or repaired.

- A vanity in the same unit must be reglazed or replaced

- The kitchen floor in one of the units "may" have water damage

I am trying to get an overall cost estimate on the repairs. I can replace the flooring myself and probably replace the sink/vanity. I have little to no experience with the other tasks.

If anyone with a bit more experience has any thoughts, I would love to hear them.

Hello BP Community,

I am a novice investor looking to get started in investing in tax liens. I currently live in Missouri, outside of St Louis, MO. I am looking to invest in Illinois Tax Liens since the return is higher than Missouri and most properties would be within a few hours driving distance for me. I have picked up a number of books on tax liens investing so I feel I have a grasp for the basic concept, but would be interested in learning more from more seasoned investors.

I have close to $15,000 in "expendable" income I would like to invest. I would be ecstatic to receive a 16%-18% annual ROI. From what I have read, this seems achievable, but I am skeptical as this sounds too good to be true. I have little interest in trying to acquire property through foreclosure, and would prefer to simply collect the tax penalties as they are paid. I also work full time and would be researching properties during nights and weekends.

Since I do have to work through the week, it seems attending auctions may be difficult (but doable, if I take vacation time). If possible, I would prefer finding "over-the-counter" properties to invest in that are left over from auction.

My questions are as follows:

1.) Is it going to be too difficult to find good properties to buy tax liens on after auctions in Illinois? Is it more of a 'requirement' to attend auctions?

2.) How should I go about getting a list of properties available "over-the-counter"? Is this simply a matter of calling and requesting the list from the county's tax accessor? Is it best to wait until right after an auction has ended to do so?

3.) I plan to drive by all properties I bid on, but there is only so much you can tell about a property by driving by. What methods are investors using to valuate properties before bidding/purchasing tax liens?

4.) I have heard that for tax liens it is best to try to pay between 3-5% of the actual property's fair market value. I was wondering what margins or rules of thumbs other investors were using.

5.) Does anyone have tips for maximizing the return on the tax lien? Its my understanding that if the individual who owes on the tax liens pays the lien off immediately, your return is almost nothing.

6.) For anyone that invests in Illinois, I would be interested in getting an idea of what your average ROI. Is 16-18% a realistic expectation?

7.) Most of what I have read has stated that tax lien investing is VERY low risk. I become VERY skeptical of any claim of an investment opportunity that is low risk AND returns ~18% ROI. There is an obvious liquidity risk, since your cash may be tied up for ~2 years. The other major risks I have heard is environmental and IRS tax liens. However, most of these at least sound like they would be rather simple to avoid. What is the risk that I am not accounting for?

Any and all advice is much appreciated. If there are any active Illinois Tax lien investors around the St Louis area, I would be happy to buy them a nice dinner in exchange for allowing my to pick their brain!

Brandon Turner Thanks, I had already checked it out. It was a great resource, thanks for taking the time to post it. I did have a question regarding the article though.. I noticed in your spreadsheet that you didn't account for vacancies when calculating the cash flow/unit. For the analysis on properties I have been looking at, I factor in an 8% vacancy rate. This seems to be enough to drop my cash flows below the 100$/unit which really makes me start to question the deal. Do you disregard vacancies for your $100/unit requirement? Finally, I have been listening to the podcasts featuring you and Joshua Dorkin. They are great and keep me informed and entertained on the commute to work each day. Keep up the excellent work!

Mehran Kamari Thanks for the link. I had already come across that article as well! I had actually been doing quite a bit of reading on the site before posting to the forums.

Hello BP Community!

As a new member to the community, I just wanted to take some time to introduce myself. I am a young investor from St Louis, MO looking to start my adventure in real estate investing. I am hoping to purchase my first multifamily home (fourplex or triplex) in the next few months. I have been trying to absorb as much information as I can from the site to prepare.