All Forum Posts by: Jacob Lindgren

Hey @Jacob Lindgren - For sure direct mail is NOT illegal in Illinois.  Here in Chicago, it's one of the tried and true strategies of the big wholesalers.

Tons of businesses do it all the time...peoples addresses is public record and you can send them anything you want.  Now if you were to start calling or texting that is a different story because you do need to ensure they are NOT on the do not call list.

Consider connecting with a very real estate-specific attorney....happy to provide you with some local referrals if that would help.

You do need to have your real estate license to wholesale more than one property per year though so please be aware of that...I'd just get your license if you don't already have it.

Some states like SC, ID, and maybe others I'm missing are non-solicitation states; However, I know some investors who still send letters. I haven't heard anything from IL.

I would just use a biz phone #, virtual mailbox, etc. 

Here's are a few things to consider when participating in a sheriffs sale/auction for real estate:

Tax Trouble: When someone doesn't pay their property taxes for a while, the local government can put a lien on the property, which is like a claim to the property.

Public Auction: The Sheriff's sale is like a public sale where anyone can try to buy these properties. They usually happen in a public place like the county courthouse.

Minimum Price: The starting price for these properties is the total amount of unpaid property taxes, penalties, interest, and other costs. This is called the minimum bid.

Bidding War: People who want the property bid on it, and the one who offers the most money wins. It can get competitive. In your scenario that you describes, there was no other bidders... which is a huge plus for you!

Owner: If you win the auction and pay the highest bid, you get a legal document called a Sheriff's deed. This means you now own the property, but there might still be other debts on it.

Redemption: In some counties, the old property owner has a little time after the sale to pay what they owe and get their property back. If they do, you get your money back plus some extra (e.g., interest, penalty fees). Please keep this in mind, do not make any upgrades on the property until AFTER the redemption period expiration. For example, let's say the redemption period for a property you won at auction is 6 months. Now during the 5th month, you decided to put a new roof on the property. Then, the original owner redeems the property after 5 month and 28 days have passed. The original owner get the property back, you get your original purchase price amount back plus the interest and penalties that were collected. But what about the $20k you spent for the roof? Unfortunately, that is a sunk cost and you lose out.

Risks and Homework: These auctions can be tricky, so you need to research the property to know if it's a good buy. Look into the property's condition, its history, and any other problems.

Rules and Laws: The rules for these sales can be different depending on where you are. Make sure you follow the rules and get legal advice if you need it.

So, Sheriff's sales can be a way to buy properties at lower prices, but you have to do your homework and be aware of the rules and risks. It's a bit like a competitive auction for houses with tax problems.

@Jacob Lindgren here's what we send out clients:

Purchase Agreement Clauses for Buying Tenant-Occupied Rental

If you’re considering buying a tenant occupied rental property, there are some documents you want to acquire for review prior to
the closing. Once the closing takes place, the seller has zero incentive to cooperate with supplying them.

Not only do you want to obtain these documents, you also want time to review them well before the closing because unfortunately,
there’s always the potential that one, or several, of the documents may be fraudulent.

So, let’s go over each document and why it’s important:

1. Lease: this one should be obvious. A lease is a contract between the landlord and tenant. It spells out the monthly rent,
when it’s due, the length of the lease (or term), should contain clauses required by the federal and state governments, and
much more. Without the lease a buyer has no legal means to collect rent from a tenant or evict them for nonpayment.
2. Rent Ledger: this is a record of all tenant charges and payments. It proves if the tenant is current on their rent and their
history of whether they’ve paid on time or not. It should also show any security deposit collected, pet fees, cleaning fees
etc.
3. Tenant Contact Information: current phone number and email address are needed to be able to communicate with tenants.
4. Tenant(s) Government Issued ID: typically, this will be a driver’s license to prove the identity of the tenant(s). Without, you
have no way of confirming the occupants of the property are those named on the lease. Proper identification of tenants is
also needed if you want any chance of having local code enforcement write tickets against the tenant and not the owner.
5. Any Legal Action Documents: you’ll definitely want to know if the current landlord is evicting or suing the current tenant(s).
6. Tenant(s) Social Security Number: this should have been obtained by the current landlord to do a background check during
the application process. A new owner will need it if they want to pursue collection and garnishment for unpaid rent and/or
property damages.
7. Tenant(s) Employment & Bank Information: additional information useful for garnishment actions to collect unpaid rent
and/or property damages. Usually collected as part of the application process.

Fraud: let’s not pretend it doesn’t happen. Desperate sellers do desperate things. We’ve seen fake leases and rent ledgers, even fake
tenants - who were placed by the seller to backup the fake lease and ledger. So. it’s not uncommon to request proof of rent deposits
via bank statements and corporate/LLC tax returns. Of course, it can be almost impossible to validate any rents the seller claims they
collected in cash. So, sellers can also be asked to sign notarized affidavits personally guaranteeing the validity of leases and ledgers.

So now, let’s get to the clause to include on your purchase agreement to make sure you get all this information in enough time to
review it.

Seller(s) agrees to provide the following to the buyer within X days of buyer’s satisfactory inspection, but in any case at least
X days before closing: All rental leases, rent ledgers, tenant(s) valid phone numbers and email addresses, rental applications
& supporting tenant identification, income and asset information, any documents corresponding to any ongoing legal
actions pertaining to the property, leases, service contracts, etc., at least three (3) months of the most recent bank
statements for any account(s) rental funds were paid into and any company or corporate tax returns for proof of income and
expenses. Seller(s) also agree to sign an affidavit at closing personally guaranteeing the validity of all leases and rent
ledgers.

Now that may seem like a lot for a seller to agree to, but if they have nothing to hide, why would they not agree?

As always, none of this should be construed as legal advice and we recommend you consult a real estate attorney.

@Garrett Christensen nailed it and I have nothing to add.

As for rent increase, don't tie yourself to any number. Wait and see what the market is doing and then get it to market rate, or within 5% of it. Don't throw away money just because it cash flows already.