All Forum Posts by: James De Silva

@RichardDunlop The property is in Westland MI.

That's amazing though, can you share how you managed to do that?

@George P.

Ouch, that sounds painful. Is there a business you can pay to deal with that mess? I'm happy to pay a one-off fee to get reduce the taxes forever

Hi all,

I've recently purchased a property in Wayne county (not the city of Detroit) where the sale price was $77,000. The property has an assessed and taxable value of $55000. This property was originally purchased in 2003 for significantly more (the previous loan at least was 120k), so I'm guessing the taxes are based on the old value of the property, which make it much higher than it needs to be.

Is this something where I can contest the property taxes? If so, does anyone have a recommended process I should follow? (I know there is something on the web about this, but if you lovely folks have any shortcuts or advice to make my appeal more successful, I'd love to hear them).

Thanks,

James

I tend to err on the side of risk, but I'd go ahead with your strategy of renting it out. Selling when the market has little chance of downside, but pretty good chance of significant upside is a touch decision.

Talk to a good property manager in the area and get him to show you that he could easily rent out your house (if he has records of people asking for rentals in your area, he will be able to easily get you a tenant). He can also give you a realistic idea of how much.

You can also take out insurance for fire damage, loss of rents etc on a temporary basis to again mitigate risk. It'll eat into your cashflow, but at least it'll only be for hopefully a few months till you build up reserves.

Finally if something does go wrong, do you have friends, family who could bail you out for a couple of months?

Just my 2c! Measured risks.

(I'm not a lawyer)

But I think, if you want to do get better asset protection, you'd need both properly setup LLC and also get an umbrella liability policy.

For what it's worth, I set up my LLC for $50 to get my articles of incorporation, I have a simple operating agreement that I got from the internet and I set up a different bank account. So a lot cheaper (but probably less safe) than a lawyer.

You don't need an Operating agreement for a single member LLC, but it helps reduce the chance of the judge breaking the corporate veil if you do get sued.

Hi all!

Could you give me some feedback about the following deal I have under contract? This is a duplex in the Westland Michigan area. Both units are 3 bedrooms, 1 bathroom, no garage, but partially finished basement. Built 1973. Generally nice area, near lots of schools.

Purchase price: $94000
Rents: $1775 (combined, currently tenanted, rentometer suggests 1000 for other 3 bedroom houses).
Taxes: $4100/yr

Including 10% PM and insurance, it comes out to $1000 cashflow per month. About 13% cap rate. So the financials look solid.

(Yes I know there is maintenance and capex, but I don't just take out an arbitrary amount, since that doesn't help).

My biggest concerns are as follows:

1. Tenant 1 has had trouble paying and is in the process of being evicted. Already had her court date. Tenant 2 is on time, but they also likely to move out. They also have too many people in that property (8).

2. We had an inspection done and there is some black mold in the attic above where they are venting out of the bathroom straight into the attic. No other major problems. Roof probably has another 5yrs left, furnaces are new.

So two questions: Would you buy it knowing the tenant problems AND

would the black mold problem be relatively straightfoward to deal with? Do you have recommendations of someone I could talk to the SE Michigan area?

I'm looking at a property that says on the MLS that is "This is NOT A SHORT SALE & NOT BANK OWNED. Must close by May 25th; Home in Redemption". It's not an auction, it's a traditional sale.

I don't fully understand what the implications of this are. As far as I understood it, if a property is in redemption, then the homeowner can buy it back from you at the cost paid plus taxes and interest. 

From what I understand from my realtor, I'd still get a warranty deed at the end of this. But does this mean:

* the current owner can take this property back off me within the 6 month redemption period?

* What happens if I have tenants in there during that time? Would the old owner have the honour the tenant's lease? 

* Would the old owner have to pay for any improvements you've made to the property?

Interestingly enough, Zillow says the property went into foreclosure nov 25th and the lender took it, which means it's pretty much bang on 6 months.

It's in Michigan if that helps.

@Copelon Kirklin

 It's a duplex, worth about 95k, both units fully leased. It was a cash deal so there is no loan on it...

@Jeff Trevarthen

I purchased it all cash. I have high scores (730+), but my tradelines are only a year and a half old. My primary source of income is my job and I've been there for a long time.

The problem with private money sources is that they tend to be quite high interest rates and many properties won't cash flow with high rates. I did speak with a few people about this and I've found a few ways out which I'm investigating

* You can adjust your credit history with additional trade lines.

* I've heard there are other lenders who will provide short term loans that are amortized over 30yrs, but due in a shorter period of time with a big balloon payment.  So that would buy you the time required to build up a credit history.