All Forum Posts by: Jeff C.

@Alvin Sylvain

The SEC, and federal securities law. Rule 501 of regulation D.

@Steve B.

I'm not sure there's a huge difference between the two.

Another distinct possibility: Your numbers are wrong.  The market may very well be letting you know that it disagrees.

@Ken Nyczaj 

Absolutely beautiful job! I'm envious of your margins. We just don't see those kinds of numbers in my locale here in Cali. 

@Minh Nguyen The majority of the time we find that the occupants don't abide by the agreement reached at the courthouse either, necessitating their removal by the sheriffs after they breach (which of course takes yet more time). Keep us updated!

@Jim K. I appreciate that. I'm glad I can add some value here!

@Matt Watkins

Trustees sale buying accounts for 90-95% of my purchases. I've seen a lot of hopeful amateurs come and go over the years. A few common mistakes that I see them make:

1. Not researching title properly. Unknowingly buying a junior lien, a property with tons of back property taxes due, or with deed issues that effect marketability or transferability will tank you. You need a relationship with someone at a title company who will be willing to run TONS of properties for you. 

2. Underestimating repair costs. Allow for everything you can see, and then allow some more for things that you can't. There will be some. Also, if the property is occupied (and most auction properties that we buy are), then you'll have to allow for a possibly long and expensive eviction process.

3. Getting attached to a particular property. Auction buying is a very low success rate operation. If you go out for a single property, you're most likely coming home with nothing. The vast majority of auction properties set for a given day postpone, cancel, open at too high of a number, or get bid too high even if they open reasonably. You will need to have a ton of properties in mind to walk with one (and you will have to have researched and ran your numbers on all of them).

4. Getting married to the opening bid. This number bears no relationship to what the property may actually sell for. If you show up assuming you're going to buy the property at this price, you're probably wasting your time.

5. Not sticking to (or knowing) their numbers. Auctions can be exciting. They can be emotional, particularly for an amateur. There can be a temptation to not let someone "take" a property from you, but you must stick to your precalculated maximum bid and walk if bidding exceeds it.

@Jon Gorham I bought those properties in 2006, and sold them just under two years ago. These were in Austin. The cash flow was good at 2006 prices, but buying at todays prices and cash flowing would be a lot more challenging. The huge equity run up made it more attractive for me to simply sell and fold that money into my fix & flip operation in CA. I felt like I had captured the bulk of the price move. I can't see an equivalent run up from here.

Where do you live? If you're a Texas resident, the high property taxes are somewhat buffered by the fact that there's no state income tax. I've done some investing in Texas, and live in California. This is basically the worst of both worlds taxwise as I'm subject to Texas property tax along with high California income taxes.

I think you'd be blessed to find a partner. If this is your first deal you're bringing neither the experience nor the funding. Someone will be betting a lot more on you than you even have to bet on yourself.