All Forum Posts by: Christopher Gilbert

We have used Norm Godwin (Godwin and Associates) as our CPA for both our personal real estate investments and our LLC books for the past 5 years and they are great. They will layout a tax strategy for just about any scenario and Norm is easy to work with. One of our companies is an S-corp and the other is an LLC, both have advantages and disadvantages and the CPA was much more useful than the attorney was that helped us set them up. The attorneys see things from a structure/legal point of view while the CPA sees the cost and tax implications, which can really impact your returns if you don't plan them correctly up front.

How many people do Google, Facebook actually employ in Austin?  Not much.  They don't even show up on any of the metrics for employees over 1000 people.  Mostly just consolidating local offices into a larger, more visible one so they can say they have a footprint in a "cool" city.   Largest employers in Austin by an order of magnitude are state/local government, UT, local school districts and a couple of semi-conductor/high-tech manufacturing facilities.  Austin has a robust satellite center environment for lots of tech companies but none of them want to setup anything bigger here other than an IT or R&D center. 

Don't get me wrong, Austin could do well by an employer with a large footprint but they aren't willing to shell out the bucks to pay them off with tax incentives like they did in the 90's and early 2000's.  And that is ultimately all that companies care about when making these types of decisions.

Austin has a young and talented employment pool but the city has not been able to close the deal on any large employers in the past 10+ years.  Dell is down to a shadow of what it once was, Applied Materials and the other semiconductor places sent all their jobs overseas.  Samsung seems to be the only big name putting more "real jobs" into the area.  I think the city is getting away from giving the big handout packages to these companies so I would be surprised to see this large of a move into Austin anytime soon.  My guess is Amazon is just throwing Austin out there to get some other city to give them the incentives that they want.

Would love to see Amazon make the move here but really just so my rental properties would have that many more candidates.

Foremost seems to be the one that most people use around here.

I don't think so.  You do not necessarily have to have an originator license, you just have to use an originator.  Look for a mortgage broker that does loan origination and they will usually do it for a flat fee (charged to the person getting the loan).  If you can't find any shoot me a message and I can recommend one for you.  The personal property thing is tough, because you have less protection and more ways to get burned (they could move the house and you would have to then find them to collect).  I recommend sticking with mobile homes tied to land and sell them as a package deal with a deed.

Hey Christian,

The answers to those questions are what separate the pro's from the rest of the bidders and you will have a tough time getting that information out of anyone that actually knows how to do it.  We see people every month buy properties without knowing all the liens that apply and cringe knowing that they just bought a big headache.

1.  Failing to perform an adequate lien search is the number 1 deal killer and biggest mistake most people make.  There are several websites depending on the county that you are looking in that usually can help you research different types of liens (you are going to have to find these yourself).  Some counties may require you to take a trip down to public records office.  In general, keep an eye out for liens that don't get extinguished with a foreclosure such as child support, local property tax, mechanics liens, etc.  Most liens like IRS, etc. can be removed when the ownership transfers but unless it goes through a formal foreclosure process you will have to try and negotiate them away.  We typically have to look at four or more different websites and search by address AND variations of the owners name(s).  This will get you about 90% of the liens, for the rest and a safety check work a deal with a friendly title company, even if you have to pay them for each search. 

2.  You have to dig and find the legal documents related.  Most of the tax suit documents are in public records somewhere (court case, etc.) but there are often documents such as mortgages etc. that you may not be able to access.  Some liens get slapped onto the property the day before the auction because people know the property is getting sold and they want their cut.  We had a $75k IRS lien added to a $60k property hours before we bought it.  We were able to get it removed but the IRS took almost a year to do it.  No lien check would have caught that one.

3.  County tax appraiser office.  You have to be careful though, even if there is not a record of a homestead, if there is a house or USED to be a house, most title companies will default to homestead holding requirements regardless of the status which means much longer hold periods.  Shop title companies to find one that reasonable wait periods.

4.  County tax appraiser office.  If there weren't back taxes there wouldn't be a tax lien so always get that information first.  Liens could go back dozens of years and can get big quickly with penalties.

5.  I have never heard of buying someone's "right of redemption".  Usually tax auction properties are there because the owners are deceased and have no direct heirs to pay the taxes.  You would have to get a quit-claim from the previous owner but my guess is that a title company would still make you wait the amount of time.  They are the ones giving the title policy so it is their rules that matter.  If the previous owner couldn't pay the taxes they won't buy back the property.  The bigger threat is that another investor pays the owner to buy back the property, but at least you get your 25% profit.  Just do NOT make any improvements to the property during the holding period, you will not get your money back on those.

Also be careful, in Texas the state says a 6 month redemption on non-homestead property but that doesn't mean anything.  Depending on the city or county the property is in, the title company will default to the longest time required, usually 1 year.  With a homestead or "possible" homestead it could be two years.  We have had title companies say 3 years.  No bases for it, was just what they felt comfortable with regardless of what the state said.

Stick with it, start small and learn your lessons up front.  It will pay off in the end if you are diligent about always following your process.

Taking money for your management services is going to be a potential issue.  This could put you in the category of a professional manager.  Not only do you have to be a licensed real estate agent, you have to either be a broker or work for a broker that will allow it.  Property management is one of the most litigious fields in real estate so most brokers do not allow you to manage property without going through their in-house management services. 

If you are on the deed with your father or have a power of attorney saying that he gives full control of the property over to you then that should satisfy you managing the property (for free).  We do this this for my father-in-law where he signed a power of attorney over to us to manage the property and we have a joint checking account for the property.  We don't get paid for the service but it does not take up much of our time.  As far as I know there is not a "legitimate" way to get paid to manage the property and have your father be able to deduct it as an expense without being a professional manager.  It would be like paying yourself to manage your own property which is basically claiming false expenses and tax dodging.

I don't see any issue with using your handyman services and getting paid for them, that is a straightforward deal if you own a legal handyman business and file taxes for it.  It would be a problem if you were just paying yourself for repairs and did not have a real business behind it, the tax man would not be happy about it. 

We use the Fowler Law Firm for most of our real estate issues.  They have one of the best title attorneys in Texas, John Lione, that we use with all of our foreclosure auction issues.  The other lawyers in the firm are decent and they cover all kinds of issues.

Austin follows the same landlord laws as the rest of the state.  No difference.  We have properties in several cities/counties in and around Austin and the standard Texas lease is followed by landlord, tenant and judge.  The strictest judge we have come across was in Austin city limits and she took no excuses from any of the tenants who came across her.  If the lease states late fees will be collected then the tenant has to pay them or they are technically missing rent.  We have won late fees up until the day the eviction was filed as long as they were "reasonable".  Which seems to be in the $5-$10/day amount. 

Hold your line with your tenant and send them a notice for non-payment of rent in the amount of the late fees.  If they don't pay then they don't have a priority on your lease.  It is only a matter of time before they give half a month payment or skip out all together.  If they pay the late fee then they understand the rules and that you will hold them to it.

I would carry a landlords policy since it is your only rental.  If the house burns down you are out the income and you cannot sell it so would be a total loss.  Make sure the landlord policy has a liability large enough to cover your personal assets in case you are ever sued.  Sometimes it is cheaper, especially if you have multiple properties, to carry a large $1M umbrella policy that covers all of your properties.  Just remember, the liability insurance only pays out as long as you did not do something illegally or if you did not knowingly allow a hazardous situation. 

We use a loan originator to comply with the Dodd-Frank/SAFE issues of selling more than two houses in the 12 month time frame.  You can sell as many want as long as they go through a finance review by a licensed originator.  Also gives you an unbiased third party to verify their ability to pay the loan.  Our mortgage broker will do the deal for $750-$1000 which gets charged to the buyer.  There are cheaper places but I trust our originator and that is worth some extra cost.

We also close at a title company to make sure everything gets handled correctly.  Once you get the first set of deed/lien paperwork drafted by a lawyer they are pretty much copy/paste from there on out.  The title company has found several things such as easement issues that we did not find on our own so was well worth the cost.  There are a lot of things needed in the lien document such as property insurance requirements, etc. as well as clarification of what happens in case of foreclosure.  Believe me, sell enough of these things you will get a foreclosure some day so better to have that put in up front. 

Holding the deed in your name is not needed as long as the lien is clear.  We also use a loan servicer which collects the escrows and handles the year end statements.  The buyer pays the monthly fee for the servicer.

Put a system in place and you can sell mobile homes on land all day long without too many issues. 

There are also a lot of shady seller-finance people out there so my advice is to keep everything transparent for the buyer and don't take advantage of anyone.  If you do this you will get familiar with the real estate agents that specialize in finding mobile homes for people and you can have these things sold before you even put it on the market.