All Forum Posts by: Denise Evans

@Antonio Lopez excellent response!  I've been doing short sales since late 2007, specializing in high end vacation properties on the Alabama Gulf Coast.  The only things I can add to your post are:

In my experience banks will typically take 15% to 20% less than the current market value for a property, because of the uncertainty of what a foreclosure will bring for them. In Florida, of course, you have that extremely lengthy judicial foreclosure procedure that can be tied up by a borrower for a couple of years. Banks HATE that.

It is critical that you control the appraisal or BPO process. Take the lock box off the property, and force the appraiser to make an appointment to see the property. At that time, present the appraiser with your market research. For a condo, as an example, my research consists of a census of every single condo on that complex that's sold within the prior 3 years. I don't typically give ALL of that to the appraiser, but if the prices are right, I do. For the ones with high prices, I have comments that show the reason--custom finishes, fully furnished, unusual buyer, etc.  I want the appraiser to have complete and accurate information to see that the market is lower than he/she might assume with a cursory market review.

I once had a short sale denied on the basis of price.  I contested it, and the bank wanted non-foreclosure and non-short sale comparables within the prior two years.  I presented evidence that 38 of the 60 condo units had been sold in the prior two years, and every single one of the "sales" had been a foreclosure or a short sale. They approved my price!

The process is lengthy and somewhat labor intensive, but the rewards are huge.

Most short sales fail because the listing agent puts an unreasonably high price on the property, and nobody makes an offer. In my market, a short sale offer that is 15% to 20% below prevailing market prices will be approved by the lender. That's because the bank analysis is always "Will this short sale generate more money than a foreclosure alternative." What they really mean is, "Will this short sale generate a sum of money that is not substantially less than an REO sale, minus costs for holding, repairs, sale and closing, discounted to present value?"

A short sale closing is cash quickly, for sure. A foreclosure is cash in the future, MAYBE in the amount of the appraisal, maybe  not. It is a gamble.

Once you understand that, you can make offers on a large number of properties that are overlooked by other investors.

I've discovered a wonderful product that eliminates pet urine odor, even in concrete. It's called "Urine Gone!" and comes in 24-ounce spray bottles. I bought mine at Bed Bath & Beyond, for $9.99. It is an enzyme-action product that breaks down the urine into components that do not have an odor. You have to completely soak the area so the product penetrates into all areas where the urine has penetrated, and then let it air dry.

I bought my first bottle when my male cat decided the fireplace was reasonably similar to his litter box, and could be used when he was too lazy to go to the other room. The Urine Gone! seemed to do the trick, but I wasn't sure until I went on a one-week trip in late spring. I left the house closed up, with the thermostat set on 80 degrees to save electricity. If any urine odor remained, I would have smelled it the minute I entered the house. What a surprise--no odor at all!

If you are interested, HERE is an article that explains why these types of products work, and why simple cleaning with detergents, vinegar, hydrogen peroxide, bleach, etc., will not do the job.

This also works on mattresses, carpeting, and fecal stains. It's a LOT cheaper than replacing the carpeting and sealing the concrete in a rental property.

Hi Josiah, First, what a great market you are in! I just heard the news about future NASA plans in Huntsville. Congrats!

Regarding evictions, you should issue a Notice of Default and 7-Day Opportunity to Cure notice on the first day the tenant is in default. Depending on the wording of your lease, that is usually the first day on which a late charge is due. The exact wording of your lease on this point could be very important.

In Alabama, you cannot file an eviction lawsuit until you have issued the 7-day letter and the tenant does not cure in time. The longer you wait to send the letter, the longer you are delaying your ability to file an eviction. You don't have to file, but at least you can, if you decide to evict.

In a typical lease, the rent is due on the 1st and late on the 6th. Your notice letter would go out on the 6th. That is counted as Day "0".  The 7th of the month would be Day "1."  The tenant can get current, plus late charges, all the way until Day 7, which would be 13th of the month in my example.  You can file your eviction lawsuit on the 14th, unless the 13th is a weekend or holiday. In that case, the first business day afterwards is counted as Day 7.

Just because you are allowed to file an eviction lawsuit that quickly, doesn't mean you need to do it on Day 8 after the notice letter.  I like to send out a Notice of Termination letter on Day 8. It tells the tenant I am serious. It is usually a "Call to Action" and causes the tenant to call me. Ideally, that is what I want.

You can continue to talk to them during that time period, and discuss payment arrangements, but make it clear the clock is ticking down. If you agree to give them extra time--say, until the 18th--then you and the tenant should sign a Forbearance Agreement. It can be as simple as a letter both of you sign. It would say the tenant acknowledges it is in default, you have given them additional time cure this one time, but if they don't get completely current by the agreed date, then you may start eviction proceedings immediately.  You do this because you want the tenant to understand you don't have to give a NEW 7-day letter if they don't pay by the agreed date.  But, unless you put this in writing and both of you sign, a judge might make you start your notice all over again.

Also, most landlords get some sort of payment in connection with the Forbearance Agreement. The agreement should acknowledge that partial payment, and also say the landlord is not accepting that as payment in full, it does not cure the default, and the landlord is under no obligation to accept partial payments in the future.

If a tenant does not cure within the time period, but then you agree to let them get caught up later, think about requiring the tenant to sign a new lease as a condition of not evicting them. The new lease might be more restrictive than the old one. It might make the rent due on the 1st and delinquent on the 2nd. The rent might be slightly higher because the tenant is a risker tenant. You might require  a guarantor.  Whatever you can get to make yourself feel safer in your future rent payments.

If you will consistently issue 7-day default letters for all of your tenants when they are late, you will see timely rent payments improve.  Some tenants will become offended if they are late one month and receive the default letter. You should explain that you recently learned you must do this consistently whenever a tenant is technically in default, otherwise you might be vulnerable to Fair Housing complaints. That is actually true. If only some tenants receive default letters, then you run the risk of some tenant claiming you treated them more harshly because of their race, familial status, disability, etc.

Good luck!  Let me know if you have other questions.

Hi Reed, I sometimes have classes in the Auburn area.  Check out my website, and I'll comp a ticket for you.  As far as investing, you should start out in Auburn. Look for those sad little, faded-out, yard signs that say "For Rent." Maybe you can't even read the phone number any more. THAT is an owner who is looking for someone to take a problem off their hands. You can master lease such a property for a term of three to five years with an option to purchase, and then make any necessary repairs, do your marketing, and put a tenant in place for a larger rent than you are paying. OR, better, you can often buy such a property with owner financing. Usually, the owner just wants regular income anyway, not a lump sum. That is why they are a landlord. But, landlording hasn't been working out so well for them in recent times, and they are looking for a solution.

Another option is tax sales. I'm a BIG believer in buying tax sale properties.  You can buy them for next to nothing, you rent them out, and even if the owner redeems, you get to keep all the rent. Often, the owner does not redeem, and you just got a decent property for a couple thousand dollars in acquisition cost and repairs.

Thanks, Ryan, I'll give them a call.

I have some free and paid resources specifically created for Alabama landlords. Check out my book in the Marketplace--"Alabama Landlord's Desk Reference and Forms Book." The post below includes a link to the table of contents and index, so you can see the book covers all the topics you need.  It is at

http://www.biggerpockets.com/forums/517/topics/186...

I'm always happy to answer questions, ,and take phone calls.

Can anyone recommend an Alabama accountant who is familiar with tax planning issues important to small real estate investors?

If the tax sale investor never took possession, then the prior owner still has redemption rights, even though it might be more than three years since the tax sale. Contact the prior owner or heirs, and see if you can get a quitclaim deed for very little money. This will entitle you to redeem from the investor. I have classes, books and dvds on tax sale investing in Alabama, if you want more information.

Julie, what do mean "there are outstanding back taxes from 2007-2008?" Was the property sold for unpaid taxes back then?  Every property with unpaid property taxes MUST be sold in the next year's tax auction.  Or, do you mean an IRS lien?

If the owner died before the tax sale, but the tax auction is in her name, then the auction is void.  If you buy at a void auction, the heirs will eventually be able to get the property back, even many years later. They will have to pay you for the taxes you've paid. Some experts say they must also pay you interest. Some say not.  You will not be able to rent the property out and keep the rents, nor will you be able to make preservation improvements and receive their value upon a redemption.

Regarding lien holders, everyone except local government liens (grass cutting lien, sewer lien, etc.) must redeem from the tax sale investor BEFORE they can foreclose their lien. As a result, the investor is protected.