All Forum Posts by: Will Sifert

Hey everyone! I'm new to real estate and BP :) My fiance and I just moved to the Covington area as he got stationed in New Orleans with the military. Our goal is to invest in real estate, and build a portfolio which allows us to live/experience life rather than working a 9-5. Our initial plan is to use the VA loan to buy a multifamily, live in one of the units until we move on elsewhere, and rent the rest. We are new to the area (and real estate) and wanted to gain some insight on the good/bad areas to invest in. We are open to Covington, mandeville, hammond, southern baton rogue (just would like to keep our commute under 1.10 or so) That being said, if anyone is familiar with the general southern Louisiana area, we would greatly appreciate the advice. Looking for a family friendly, safe flood zone, stable economic area! Thank you all in advance!

Thanks for all the great responses guys, I have been searching for a long time for anybody who has actually been in a similar situation before. My attorney and I have tried 3 different title insureres locally and we have been in contact with an attorney in Sioux Falls who had a connection to a real estate agent who had helped get difficult properties insured before. Apparently he tried several things and none of them worked but he stopped responding to us after about two months so no explanaition per se from him. If anybody would be willing to share with me a title insurer who was willing to insure tax sale properties I would greatly apreciate it (could be through email if need to keep private).

As far as approaching the previous owners/trustees (the previous owner established a trust to try to hide the property from the IRS, trust was demonstrated to be a sham by IRS in their trial) one is in prison, another is just out of prison, and I think the third is on the way to prison. They contested the sale up to and on the day of the sale unsuccussfully, at this point approaching them is likely out of the question. 

Is it the case that I would have the option to drop a quiet title action if anybody tries to contest it? If so that would remove a great deal of risk from that option. My understanding is that if I iniated one they would have to be notified and if they contested I would have to defend my position in court, meaning if I lost I lose the property right then and there as well as my investment. 

I am currently trying to secure a loan that would not be attached to the property that would allow me to still buy it. Just today another option came up, the cheap FSA loan that I was approved for could be used to buy a different piece of property from my Dad and Uncle (they are partners) for which a title insurance policy could be issued. Using this option would result in them keeping the tax sale property as is and them selling another property to me. I'm not sure I'm ready to go that route yet but it is at least an option on the table. 

Just because it's occupied, you cannot assume it is in 'livable' condition.  I have seen many properties on the tax sale where there was someone occupying the property without all of the usual utilities.  Also, they may have 'inherited' the property and it may have years of deferred maintenance.  Remember the occupant is likely considered a homeowner - your occupant will likely be a renter (even the occupant at the time of the sale may be a renter after the sale) and most areas have some code regarding the condition of a rental property (think smoke alarms, working windows, safe electrical systems, etc.).  It may take a significant investment to bring an occupied property up to that condition.

Making money is always the plan.

I'm not splitting hairs here because I'm surprised to see such extensive instructions for bringing legal action published by any branch of the government, but the publication appears to be put out by Judicial Branch and not the Clerk's Office, but again, I'm surprised to see it.

Good questions....but no easy answers.

1. Nothing quick about checking liabilities....this is time consuming.   You have to do a title search and other searches like bankruptcy.  You have to either pay for title searches or learn to do them yourself and feel comfortable you really know how to do it with the resources you have.  Chances are there are no mortgages that will actually go to sale and get sold.  If it is a nice house with a mortgage, chances are the owner escrows, or if not the lender will pay Monday before or morning of the sale, and property will get pulled.  Pretty much all governmental liens will stay with the property like mowing, demo, code violations.

2. You have to determine what your risk tolerance is.  Everyone is different.  Everyone has different skills and headache tolerance.  Just to give you an example...I don't like old single wide mobile homes.  I can't ever imagine I would buy one even if it is $100.   There are plenty of people who buy these.  I've seen $50 lots for sale.  I don't want to mow or have those mowed for the next 5 years and owner finance $1000 lots in small towns that have not had any homes built in 20 years and probably don't have utilities to them or if they do it is 80-100 year old water and sewer lines that you'll mess up when you try to connect.   Those are just headaches I don't want to have at this point in my life.   There are people who do like these headaches.

3. For the most part you won't be able to sell any of these properties for 2 years. Just keep that timeframe in line. Forget the six month idea. Chances are no title insurance for 2 years, so with no title insurance, no one will probably lend on them. Certainly no normal bank mortgage financing. Why would I buy with a profit to you if there is a chance any spread I pay you could/would get wiped out if owner redeems or challenges the sale. Sure if you buy for $50 and sell to me for $100, maybe I take that chance and you double your money, but when and where does that risk stop. I'm not probably going to buy for $200,000 if you bought for $100,000 and risk loosing $100K if owner redeems....no matter what ARV is. Are there exceptions, sure...but they're more the exceptions than normal reality. Almost nothing that sells is occupied, so don't really plan on that. If it is occupied, rare is it the owner. Can you lease, sure, but in reality most and I mean like 99% are not move in ready. You probably won't get reimbursed for the improvements you will need to make to get them ready to lease, so if you improve them enough to get them leased you add risk. If you do lease them, you probably want to do it on a month to month basis with the full understanding that the property could get redeemed next month and tenant then has to move out...could be 2-3 months, could be 24 months, just never know. I would expect you would not get full area rent for most property. Maybe you have to rent 1/2 price or 1/3 price of area comps to encourage someone to take on that risk of short move out. My normal advice is plan on holding them without income for 2 years. Plus you will have taxes, insurance and potentially some maintenance for that two years.

4.  Harris County is probably the most competitive in the state, perhaps with Dallas, Bexar, Fort Bend, and Bell.  Not sure there are stats or real data to back that up, but you might see 300-500 people at Harris, 300 people at Dallas.   Of course there are a ton of properties on the list in Harris...so more properties, more population, more bidders.   Smaller counties typically have fewer bidders.  I have a nice story about one deal I bought where the sale started with 2 people, me and one other guy.  When he learned about minimum bids he had to bail as he thought bids started at $1.  So I was the only one left.   That's pretty rare.  Depends on what you want to buy, but I would say most sales are competitive.   There are deals, but you really have to do a fair amount of work to find them.

5.Drive every property you plan to buy.  NO exceptions to this.  Google is your friend to eliminate properties, NOT to decide what properties to buy.   Skip this and someday you will get burned.  KNOW 100% what you are buying and your exit strategy.

6.  It's a cash business typically.  So plan on your cash being tied up for 2 years or longer.   That solves Tax Sales for most people.

7.  Just like any other niche there is money to be made, but it is work.  It's not quick and easy 99% of the time.  You research, you drive, you estimate, you go to the sale all day on a Tuesday and sometimes you win and sometimes you don't.  If you don't win,  you may do this 2-3-4 months in a row and never get one property.  At that point most people hate their life, and go home and try MLM.   If you win, then you tie up your cash for 2-3 years or longer.  Plenty of headaches along the way in many cases.   I would guess just like any other real estate niche 90% or more give up after 4 months or one deal.

Get your list, decide what you want to buy, do your research, go drive the properties, go to the next auction with your list and max bids.   Don't bid, just watch.  See what others bid compared to your max bid.  Would you have won, lost, or not even been in the game?  Then you have a better idea.

None of this is to discourage you, just to give you an idea of what's in store.

I just completed the weekend program for $350 and as a newbie, I don't feel it was a rip-off. I learned a bit about the process and was given info on how to get started researching on county websites and also info on the lifecycle of a lien. I signed up for the free intro 1 evening class that was full of 'too good to be true' info so I was skeptical going into the weekend class but wanted to know more. About 30% of the weekend class was useful information, and during that time all of the participants were present, but the other 70% of the time was a bit filled with a mixture of fluff, personal stories, rah rah macho talk about domination, and stories that gave the audience FOMO. During this 70% of the time, they individually took participants out to the lobby to have one on one talks about their personal situation and reasons for being there and also to push their $35k Diamond Level annual membership. I have only good things to say about the team that did the presentation and I enjoyed talking to my advisor but there was no way I could wrap my head around spending that much. Initially I didn't understand why these professionals were traveling around the country doing this type of shpiel if they were having the type of success they presented during the weekend. I estimate that there were about 60 people on the first day and it dwindled down to about 25 people on the third day. I estimate about 10-15 people signed up for the diamond level so that is a pretty good chunk of change. The information was not presented in handout format, but on a screen, so notes had to be taken throughout the weekend so that was disappointing as it was hard to scribble info down quickly and also understand what was important/unimportant. I couldn’t find any positive reviews about the diamond level, but would love to hear a first-hand experience.

I'm well aware that there are thousands of parcels worth $5k-$10k.  They're worth that in part because there are thousands of them (and they probably don't have the infrastructure to improve them).  Why in the world would you want to buy one?

Can you tell me what county puts out a step-by-step instruction on how to perform a quiet title action?  In my experience a county clerk won't even tell you how to prepare a deed since that might be seen to be practicing law.

I believe in every county in every state, an individual is allowed to proceed pro se (corporations are not allowed). However, in my opinion if a parcel is only worth $5k, there's a reason (lack of access, lack of utilities, wetlands, etc., and if so, it's not worth spending the time or energy learning the process.  But what do I know.  I have purchased low priced properties before because with my experience I was able to identify ways to clear apparent title defects but I always hired an attorney to handle the actual litigation if it came to that.  Judges like all people, do not know everything, even about the law, and as I wrote above, they have a tendency to rely on the attorneys appearing before them to tactfully provide an education about the law related to the matter before them.  A lay person, trying to save a buck will probably just be an annoyance, particularly when the judge is put on the spot not knowing the underlying law. 

@John Tran that is one of the risks of tax sales. No one talks about risks like these but it is a real risk. You can get insurance but I don't believe you would be repaid for your insurance costs if it redeems.