All Forum Posts by: Gordon Starr

Hi Joanna! I'd like to congratulate you, however, I may also pity you. It depends on where in Cleveland these places are!

You will be swimming in deductions once your business starts making money. You can usually carry this years losses against a later year's profits. I try to deduct as much as possible as soon as possible, which means capitalizing as little as possible.

My tax basis is so low, its almost unbelievable. Then when I sell, the tax man cometh with a vengeance. Sooner or later you have to pay..

I think a lot depends on just how many properties are going to auction. I've bought effectively in Detroit and Dayton, OH without the problems mentioned above. However, both those places were just swimming in foreclosed properties. All kinds of decent buildings going for 10-20k per. That is not much to lose and the foreclosure process should wipe the title clean if they do it right (detroit doesn't, dayton does). How is Nashville?

I like the treasurer's auctions better than the sherrif's auctions just because the banks aren't there driving up the prices. good luck -- its a major factor..

Hey Austin, To put some solid numbers together, I think you should have the places inspected, then appraised and inspect the books closely to determine past returns. Are there a lot of deferred maintenance, pending lawsuits, or nightmare tenants looming? If not, past returns should be a good indicator of future performance. I would recommend you be present with the inspector to get a feel for the places and determine how much you personally wish to be involved with them. Good luck, Gordon 

If you maintain a 100% cash position, you eliminate interest. Not so widely known, is you can also eliminate property insurance and a whole host of other insurance. You can also get a much better deal on the purchase. Quadruple your cash flow if you can stomach the risk! Good luck, Gordon

Can anyone speak from experience what it is like selling through them? I have one in the certification phase. The inspection report flagged the roof for replacement although it has 1-2 years left. I don't mind doing it, but I told them the price would go up and they seemed ok with that. People would rather pay more for a place all fixed up than pay less for a place with deferred capex. Makes sense, I guess. Gordon

If you are uncomfortable, you are probably not ready for the auction. But it is something you can learn if you want to get steals on distressed property. Each county has a foreclosure process and how good a job they do with it has a lot to do with how confident you can be buying foreclosed property wherever you get it - at auction, on mls, or from a private source. I always check places out beforehand and make sure they are vacant and decent. The county treasurer, county recorder, BP, google - usually lots of info available on a given property or a given type of auction. In my area foreclosed titles are squeaky clean. The county will buy them back if debt is attached to them.

Its possible to set up your purchases and management to favor you as a landlord and your particular skills and interests. For instance, buy a bunch of properties in close proximity in a place not far from where you live. Buy distressed properties at auctions or from wholesalers and fix them yourself. Get your places looking really pretty, then be patient and you can get the tenants you want - nice people that can afford the place. Its a lot easier to self manage that way. Good Luck!

One trouble with Detroit is it is just too huge for the number of people who live there and this means lots of vacancies. When I was looking in 2012 the treasurer was auctioning 20,000 properties in one week. 99 percent weren't worth buying but I looked at so many.. It makes me sick to think of it. Thankfully things have gotten better. The city was run by crooks and the titles were all screwed up. You had to quiet title everything before you could sell. The auction is going on now..

https://www.metrotimes.com/news-hits/archives/2018/07/13/1500-detroit-households-face-tax-foreclosure-ahead-of-fall-auction

The good thing is you can get a whole lot of house for your money in C class and below. Back then, Dayton OH and Detroit had the lowest price/rent in the world. But it was damn risky and the potential returns ridiculous. I ended up buying Wayne and Dearborn suburbs and did well there. Would have really crushed had I kept it, but I sold Detroit to focus on Dayton.

Krystal, I recommend you diversify to a different asset class Say, buy in downtown proper c/b class neighborhoods. Buy hardened littler homes surrounded by similar solid places. That is where the appreciation is happening fastest. Seriously, south of town is pricey for rentals and the returns are ho-hum  by comparison.

If a C class area is revitalizing, you can really clean up with the property appreciation. Not a big deal on the meter as the utility company will bring a new one, probably no additional charge. Its their loss not yours. The AC is a different matter, that will cost you a lot. As soon as you get some vetted tenants in there, this should stop. When the place is vacant you get robbed most often. Suspect your immediate neighbors and yes, they may be back for your rehabbing tools and equipment.

To counter this during the vacant period, both I and my dog are on site a lot. That sends a message - rob this place and you could get hurt real bad! Lighting the place up helps too. Any way you could set up some solar lights till you get the power on? Good luck Skye!