All Forum Posts by: Jason Brown

Hey BP,

I've got a question I could definitely use some advice on. A wholesaler ran a SFH property here in Miami by me that looks like it could be a great fix and flip or BRRRR. The only issue is that it comes with an ancient lien from the city from 1992 that has been accumulating up to the tune of about 1M. To give you some perspective this property has an ARV of 180 - 200K and we've agreed on a wholesale price of 100K. Obviously with this kind of price there is no way any lien of this type could be paid off unless it were dismissed or negotiated down. From what the wholesaler tells me the seller is in very bad financial shape and there is no way they could pay off the lien before hand so it would be my responsibility to take care of it.

Now I'm all for doing the legwork to take care of a lien if it means getting a great property for a great price I just want to be certain that I CAN actually negotiate it down to something reasonable or get it dismissed BEFORE going under contract to buy the house. The problem is that I don't know how exactly to construct a deal where I pay to clear a lien on a property I don't currently own and my fear is that I could get caught helping the seller clear the lien and then they turn around and try to not sell me the property.

I had thought about adding an addendum to my standard purchase and sales agreement stating that if i cleared the lien the seller would be obligated to sell me the property for the agreed upon amount I just don't want to risk shelling out 5 - 15K clearing someone else's lien to only discover that I can't force them to continue with the original agreed upon contract.

Any suggestions or anyone with experience clearing city / other liens on properties would be greatly appreciated.

Jason

Hey SF BP,

I've got a question I could definitely use some advice on. A wholesaler ran a SFH property here in Miami by me that looks like it could be a great fix and flip or BRRRR. The only issue is that it comes with an ancient lien from the city from 1992 that has been accumulating up to the tune of about 1M. To give you some perspective this property has an ARV of 180 - 200K and we've agreed on a wholesale price of 100K. Obviously with this kind of price there is no way any lien of this type could be paid off unless it were dismissed or negotiated down. From what the wholesaler tells me the seller is in very bad financial shape and there is no way they could pay off the lien before hand so it would be my responsibility to take care of it.

Now I'm all for doing the legwork to take care of a lien if it means getting a great property for a great price I just want to be certain that I CAN actually negotiate it down to something reasonable or get it dismissed BEFORE going under contract to buy the house.  The problem is that I don't know how exactly to construct a deal where I pay to clear a lien on a property I don't currently own and my fear is that I could get caught helping the seller clear the lien and then they turn around and try to not sell me the property. 

I had thought about adding an addendum to my standard purchase and sales agreement stating that if i cleared the lien the seller would be obligated to sell me the property for the agreed upon amount I just don't want to risk shelling out 5 - 15K clearing someone else's lien to only discover that I can't force them to continue with the original agreed upon contract.

Any suggestions or anyone with experience clearing city / other liens on properties would be greatly appreciated.

Jason

@George Griffith If you're aware of a 4 plex for 310K that's definitely an property I would be interested in. I'm assuming that any legal 4 plex at that price has got to be in Broward County or farther north although I could be wrong (maybe something off market).  Anything in Miami Dade cash flowing 825 a month per door are either 1/1's (which would still be under market) or a serious value add. Are all rents at market rate or is there room for increase? I'll PM you because I would really like to know more.

@Yasmani Delgado I think thats a great idea. I am also open to partnering. I have contemplated trying to take down something larger with a partner previously. There are a few 5 - 20 units in the low to mid 1M's that I think would be interesting possibilities if we could come up with the down payment or negotiate with the sellers on terms and add value for a stronger equity position. We should link up and discuss possibilities. Let's connect via PM and see if we can align our goals into something we can do together.

@Jordan Hamilton Don't worry about it. We all go through the same frustration with the first one. the first deal is always the toughest because it seems like it will never happen but it will. I just finished my first BRRRR in liberty city and now I'm on the hunt again for rental #2.

@Jordan Hamilton JUMPING on what @George Griffith said in this business you 95 out of 100 sellers would reject your offer and they would be RIGHT to do so because they can get more from less savvy buyers. However you doing your math correctly and not letting emotion or impatience keep you from jumping on something you shouldn't is the REAL WIN!!! The key is consistently making offers and finding the 5 sellers who are in a position where they really NEED to sell and negotiating from there.

So happy to see people out here doing the GOOD MATH. saves lives!

Sorry i meant a 4 plex cash flowing for 4400.

@Jordan Hamilton Allapattah is my exact farm area for my investing and I believe I've probably looked at every MLS listing in between Flagler and NW 62 St. In my opinion the price of 550K is consistent with what MLS listings for 4 plexes are going for but it is not a good deal for investment.

In Allapattah at 1100 you are implying that the units are basically 1/1's because 2/1 and up are at least 1300. At 550K they are asking for 138K per 1/1 door which is high for my criteria. Even though Miami is hot right now you should still be looking to at least achieve the 1% rule as it is still very possible. 

This is probably a walk away situation where the previous owner bought too high and is trying to offload their problem on you. Don't go for it. Your numbers are spot on. A 4plex cashflowing 3400 a month in Allapattah should definitely not be looked at for more than 300K. Unfortunately not everyone is an investor and the pressure from little havana and wynwood from normal buyers is bumping up prices all over the city. 

One further thing to take into consideration. Also remember to look at your cashflow not only from a dollar perspective but a dollar/per tenant perspective. Yes you are cashflowing 400 a month but you are managing 3 leases so you're cashflowing 135 per tenant. Also is management (are you paying yourself) part of the 50% expense assumptions? Yes you will live there now but one day you will move and is there enough play there to pass off the handling to a professional?

Good luck out there man! I LOVE MIAMI!!!

I'm actually closing on my refi this week. I locked in for a 30 yr fixed at 5.375% on my SFH rental.

Thats sounds about right.

@Britt Amirh I feel your pain. I must have called a dozen local banks here around town without getting any response before finally settling on one. It just blows your mind sometimes how you will call a banker ready to work with them and give them your business and they will not even return your phone calls. 

What exactly were you looking for product wise and what rates did they quote you?

Maybe that would give me a better idea as to who you might be a good fit with.

Seems like you and @Racheli Vidal have something in common.