All Forum Posts by: Lenzy Ruffin

http://closewithdee.teachable.com/p/dc-summer-2017...

The course includes the coverage of the main steps for the tax sale process - including the bidder registration process, due diligence and information gathering, the required pre-bidding depositing of funds, final payment due date, receipt of the certificate of sale, redemption process, pre-compliant posting, foreclosure proceedings and compliance with the statutory one year deadline.

Thank you, @Audrey Ezeh. I'll give that a try. 

They provide that info here, too, @Kiet N. But when the mailing address is the property address, you don't know who is paying the taxes. In a number of instances, I've done a skip trace and know the owner listed on the tax record is deceased. But somebody is keeping the taxes current.

Is it possible to find out who is paying the property taxes on a vacant house? 

I've come across a number of properties that had clearly been vacant for years when I first found them and they remain vacant and the property tax payments remain current. Is it possible to find out who is making the payments? 

@J Scott is there a general rule you can recommend for determining MAO on teardowns? I drive for dollars in PG county, MD and I see teardown candidates all the time (small houses about to fall over on huge lots...or burnouts). I use the 65% rule for evaluating rehabs, but that's no good for teardowns, at least not without modification.

Can the 65% rule be adapted for teardowns or is there another way that builders determine MAO?

MAO = (ARV * 65%) - rehab costs

Is 65% still a good number to discount ARV by? I understand that ARV would be based on new construction comps rather than rehabbed comps. Can rehab costs be replaced with "per sqft" building costs, for example? I'm just trying to find a formula that will allow a quick, preliminary analysis of a teardown candidate.

Basically, my line of thinking is "new construction comps are around X sqft, so this new build would have to be X sqft. What is the MAO to tear down existing and build a house of X sqft?"

Any guidance you can give here will be much appreciated.

Aja, check out The Millionaire Real Estate Investor by Gary Keller. There is a ton to learn in real estate and that book is a great one-stop resource. 

It's very unlikely you'll be able to buy a rental before March, even if you have enough cash in the bank to do it without a lender. I'd hate to see you get discouraged for not hitting an unrealistic goal. 

If landlording is your investment strategy, one of the first things you'll have to figure out is who is going to screen the tenants. You'll either need to learn how to screen tenants yourself or how to screen property managers. Either way, BP has a ton of info. Make sure you check out the podcasts in addition to the website. 

@Chris Seveney I wasn't proposing that as the size to build the new houses. It was just something I mentioned as a benchmark for values in the area. There are 3000+ sf houses in the area, too, at a higher price point. I don't know how the math works on development, so I was hoping to find out what would make sense for a developer to build [whatever they would want to build] so I can make the homeowner an offer. 

I've tracked down a property owner of two neighboring houses in Hyattsville, MD 20781. Each house is a teardown. One house sits on a lot just under 14,000 sqft. The other house sits on a lot just under 18,000 sqft. The owner is interested in selling both properties together.

The homeowner pointed out the square footage and the opportunity to subdivide the lots and is looking for an offer that reflects that value. I don't know how to do a MAO calculation for a teardown / subdivide / rebuild, so I can't make an offer to the homeowner at a price that will make sense for the builder who will actually do the work. The ARV for SFRs of 1000-1500 sqft in this part of Prince George's county is $300K+.

I'm looking for a builder who is experienced with this type of project who wants to work together to construct an offer for the homeowner. That could be as simple as telling me what formula to use and what other factors to consider in constructing the offer. If the homeowner is willing to sell at a price that makes sense, I'll bring that deal right back to the person who advised me on how to construct the offer. 

I'll gladly accept any advice on the MAO math from anyone, but what I'm really looking for is someone with the capacity to take down the deal to tell me how to calculate an offer for these two properties that meets their criteria and that way I'll know I have a buyer if I can reach an agreement with the homeowner.

What experience do you have in rehabbing properties? $50K-$75K is not updates, those are repairs. That is a full rehab that has to be managed as such. See J. Scott's book on flipping houses in the Bigger Pockets library. I know you're not flipping this house, but with that amount of repairs needed, it's basically a flip that you're going to move into. That amount of repairs is a big project, especially if it's your first one. How did you determine that repair estimate anyway?

Also, $300K in Riverdale is basically retail price, depending on the size of the house and where exactly in Riverdale it is. That's a high price to pay for a house that needs $50K work, minimum. And what is your basis for suggesting that the house could sell for $400K-$475K in two to three years? Do you have a data analysis to support that? Otherwise, it's just speculating/guesstimating. Even with a data analysis, you'd still be trying to forecast the market, which nobody can do. Investing based on appreciation is something they routinely caution against in the podcast. You make your money on the purchase, not on the sale. If you buy for $300K and your repair numbers are right, then you'd be investing based on appreciation because you bought too high. If you plan to live in this house for ten or fifteen years, that's something different. But if you're thinking about selling it within five years or so, you should probably take a hard look at the numbers using one of the BP calculators. 

I'm not trying to discourage you from pursuing this. I'm asking you questions that you may not know to ask so you go into this fully informed. $75K is a lot of repairs. There are so many opportunities for things to go sideways when you have to do that much work. You need to have a plan for executing that rehab before you start. Have you identified a contractor? Have you gotten a repair estimate to know exactly what needs to be done? How are you going to fund the repairs? What is your exit strategy for this house (do you plan to live in it indefinitely or flip it in the near term)? Once you figure all these things out, you'll be in a better position to evaluate this opportunity.

I couldn't tell you, @Account Closed. What I can tell you is I know how it works now and this won't happen again. This is just one of a thousand things that I didn't know before, but I do now.