All Forum Posts by: Jake Hartnett

Those sound like pretty good numbers. Is the rate adjustable? can they call it due anytime? is there a balloon?

You probably won't find much better terms than that, but you can ask sellers to carry a 2nd, or you can find a money partner to finance the down and you get 25%-50% equity for putting it together, or you can BRRRR.

Talk to a lawyer.

I have done a little work in this area and you have to be very clear that you are looking for a list of Tax delinquent properties, a list of properties that are currently not up to date on their taxes, not properties that are up for tax sale, not properties that have gone through tax foreclosure, or tax forfeiture (I'm not sure about all of the terminology here). They might still be confused. They might not know where the list is, or who keeps it. Be helpful to them and reiterate a few times exactly what it is you are looking for. They always think you are asking about the next tax sale. The list is probably in a jumbled Excel file that no one ever looks at. And it will probably cost you $50 or so. From state to state properties might be tax delinquent for 1-7 years before they go up for tax sale. Talk to a lawyer about exactly how this works.

Be very kind and professional with them and try to use a tone that is in no way pushy. They tend to be very skeptical that you are trying to scam people. Tell them exactly what you are doing if they ask, even though it is their job to provide the information. "I am a real estate investor and I would like to contact the owners of these properties and ask them if they are interested in selling, sometimes people who are behind on their taxes want to sell but don't know how because of the back taxes."

I had one person who was very hesitant to give it to me because apparently someone was posing as the county of the feds demanding payments or something, some kind of scam. Assure them with your professionalism and your helpful demeanor that you are not a scam artist.

Good Luck.

Commercial properties get taxed at a higher rate, at least here in Minnesota. I can think of a few scenarios where that can easily happen. If you bought 29 years ago and haven't refinanced your payment on a very expensive property could be less than your tax bill if the area has seen even marginal appreciation. Or similarly, if you put a significant amount of money down, like 80% down you might be in the same situation.

@Darren Budahn As a cash flow investor, comparable sales mean nothing. If everyone else is buying properties that are -$250/month cash flow, and you buy one that is only -$100 because you negotiated a lower purchase price and "bought at a discount" its still a bad deal.

There are many values for every property, but only one price. The seller values the property at one value, the buyers each value it at different values, and the county values it at still another value. The price is when the highest buyer's value is higher than the seller's value. When the buyer's offer is lower than the seller's value there is no sale.

When valuing a property, the only thing that matters is your own buying criteria, not what other people are paying for similar properties.

Bigger Pockets, REIAs, call for rent signs and craigslist ads and ask the owners if they have ever thought about investing in other markets. Have some numbers available to show them.

Sounds like a good niche. Good luck.

Those taxes though!

Is there any way to reduce that? In my area this would be just a regular bad deal if the taxes were $4000, but this is an awful deal with $10,000 in taxes.

You also aren't accounting for management. I use 8%. Also, get a quote on lawn and snow and pay that to yourself. No cheating.

Are those rents at market rate, even with you paying the utilities? Would you be able to charge the utilities back to the tenants and keep the rents the same? What about trash?

I would be skeptical of this even if the tenants paid utilities and the taxes were $4000.

First rule about real estate agents (not mine of course) "Agents lie." Their incentives are not aligned with yours. They get paid if you buy, doesn't matter if its a terrible deal, and they get paid more if you over pay. Trust the numbers.

The other numbers look reasonable, but I don't know your market specifically.

You have to focus.

In a big picture way you have to decide if this is really right for you. You have to do some self reflection and decide what is you competitive advantage. Do you have access to family money, are you wicked good with numbers, are you a great negotiator, can you swing a hammer? This will help you determine what niche you should be in and what other people you might need to bring on.

Pick an area, probably one that you know already, probably where you live, or plan to live. Pick a niche. If you like Multi, do that, if you like condos, know everything about condos in your area. It doesn't really matter, pick one and learn everything. Ignore everything else.

Talk to a lender in your area, talk to a few. I was recently surprised to learn I can buy another property with a conventional loan because I talked to a lender that offers financing that counts the property's income towards your own. Make no assumptions. Talk to everyone with a "how can I" not an "I can't" attitude.

Go to a REIA and introduce yourself. That's a great place to meet lenders and agents.

Take a local investor (that you find on BP) out for drinks. Ask questions. Offer your time. Ask what they are looking for.

Most importantly: Take action everyday. Read books, and spend time on BP, listen to every podcast, but most importantly meet people. Meet with three people in RE three times a week. Ask flippers if you can see their flips, Ask brokers for P&Ls on listings and practice crunching the numbers. Do something everyday.

I finally took this advice and my Real Estate world is blowing up.

Give yourself a deadline: 6 months to buy a 4-Plex. Put the date on your fridge. Work backwards. In 4 months I need a 4-Plex under contract, in 3 months I need to have looked at 20 4-Plexes, in 2 months I need my management systems, contractors etc lined up, in one month I need my financing figured out in 2 weeks I need to know what my buying criteria are, in 1 week I need to know what market I'll be investing in, today I need to analyze the market where I live and decide if it will accomplish my goals. Something like that.

This is a business. It is not passive income, at least not at the start. Get to work and have some fun.

Interesting topic @Sharad M.

Here are some counter points to your point:

I think home ownership was artificially high when it was at 69% because of the no doc, Ninja (NINJnA: No Income No Job no Assets) loans we were giving away at the time. Borrowers today are actually qualified to buy a home.

I think there is a demographic shift towards more rentals and less home ownership. I see Boomers downsizing into apartments and smaller homes, and I see Millennials who are leery of home ownership because of what they saw when they were coming of financial age (I am one of these, I was 23 in 2008 when I should have been thinking about buying a home).

The home ownership rate has been between 62-66% for the last 50 years except for the run up in the aughts. Right now we are right back in the historical norm at about 64%.

I think this spells big profits for real estate investors, because we will be competing with fewer retail buyers (who tend to pay too much) and there will be plenty of demand for rental units.

Millennials seem to be good savers, despite shouldering high student debt loads, and working lower paid jobs as a result of entering the workforce in the recession. They (we) are seen to be bums because we have low paying jobs, drive junky cars, drink expensive beer, shop at thrift stores and travel a lot. I see this as a reaction against the consumer mindset example set by the boomers and genXers. We aren't willing to spend a lot on material things so we can spend more on experiences. Our parents told us things don't make you happy and we listened. Millennials seem to change jobs a lot, move cities a lot, and as a result they rent wherever they go.

In regard to the idea that low home ownership will somehow bring about an economic crisis, I don't see it. Because there is a shift to experiential spending not material spending, more money goes to entrepreneurs in America (Millennials love handmade, boutique, one-off originals) and less money goes to China for plastic crap. Also, where a boomer or a GenXer might have bought an 1,500 sf 3/2 when they were in their twenties, Millennials are renting a one bedroom and saving the difference, or spending it locally.

We will see what happens when Millennials finally start having children, but in the mean time I think there are other ways to save than just home equity.

I'm interested to hear your thoughts.

Welcome to BP @Melven Saint-Paulin, You've come to the right place. Stay active on the site, keep learning, and keep taking action!

I wouldn't count on an economic collapse. That sounds like a smoking deal in any economy. Position yourself as an expert in your market, do a few deals if they look great (like this one), and if the economy does collapse you will be able to find plenty of private money that people are afraid to put in the market. There will be another collapse, maybe in one year, maybe in 10 years, maybe longer. Its very difficult to say. I think that borrowers are much better qualified than they were before the last collapse, and interest rates are rock bottom, and with all of the QE money in the system we are probably ready for more inflation.

You can make money in any market, this one looks like a winner.