All Forum Posts by: Michael Abernathy

Hello BP community.

Over the last year I have acquired seven lots. Three are in St. Augustine FL and four are in Hutchinson, KS. The St. Augustine lots are going to take some work, so I am going to focus on the Kansas lots.

I “purchased” these from my mom. The reason I quoted purchase is because one day I get a text from my mom with a picture of a letter from the county. They were going to sale her house due to back owed taxes, $5,300. I told her I would pay all the taxes and fees, but she would first need to sign the house over. She is family but if you knew my mom, you would understand I was just protecting my money. As soon as I got the okay from the attorney, I paid all the taxes. I pulled the house up and it sits on a very large plot which is four lots. Her house and garage take up two lots and the other two are grass that I pay to have mowed.

I’d like to get some sort of money coming in, but I am not sure how to approach it. It is not in a very desirable end of town and prepping the lots for a trailer and renting the pad is an option. Another option could be putting in two manufactured homes and charging rent.

I am just not sure of the costs associated with each option are how to evaluate the two.

Any advice from the gurus?

Thanks,

Mike

Below is a picture showing the lots that I own and how they are configured across the street in yellow.

You will have to wait until next months list is released.  This months auction was available about three weeks before the date of the auction.  Once it is available you log in with your account and then click on the "Quick Search" link.  

As soon as you choose "TaxDeed" in the "Auction Type" drop down menu you will be able to enter the upcoming date, Case Status, Opening Bid (min & max), Assessed Value (min & max), etc...

Then click "Search Report"  As soon as it generates the list you can then export to a .csv

Hope this helps.  This would of saved me about a weeks of work.

 Yes, this action was for Duval county.  https://www.duval.realtaxdeed.com/

 The link for my county is, https://www.duval.realtaxdeed.com/.

You have to create an account but it is free and that same log in will give you access to 90% of the other counties in FL, or anyone else hosed by that auction company.

I also figured out how to export the list to a .cvs file after the auction.  

Well, I took last Wednesday (10/18) off from work and sat in front of my computer for nearly 10 hours.  My goal was simple, to snag up an amazing deal at the tax deed auction.  Needless to say that did not happen.  Although it was a great learning experience.

The first thing I learned was that over half of the properties will get redeemed, at least the ones that I was interested in.

The list came out about three weeks before the auction.  There were around 470 properties.  My first hiccup was that I couldn't figure out how to download that list to an excel format.  So I paid our baby sitter $200 to go through all 37 web pages and put together an excel sheet based on the criteria I gave her (Opening bid, Address, Parcel #, Assessment, Avg comps of top 5 real estate sites, yearly taxes, etc...).  I only had $50K to invest so anything with a starting bid over $50K was not recorded.  I also didn't want to invest in the ghetto so anything with a county assessment less than $45K did not get recorded.  That still left me with a list of around 129 properties.  Out of those properties I narrowed it down to around 40 based on area and rental potential.  I then spent Saturday and Sunday driving everyone one of those properties.  THIS IS A MUST.  Five of the houses that I was interested in had been demolished by the city.  Even though Google Maps showed a house.  

After two days of driving I had my list down to 15 properties.  I then spent the next week reviewing the cases for each file.  My county provides a wealth of data on each case (Title search, lien holders, etc...)  Remember those 5 demolished houses.  At first I kept them on my lists.  They were in nice areas and if I could snag the lot cheap enough I should be able to do a quick flip on them...WRONG.  Each one carried a demolition lien that ranged from $17K to $32K.  Since it is a county imposed lien it would survive the tax deed auction.  I sat in my chair scratching my head as these parcels got bid to ridiculous amounts.  Either they did not realize the house was gone or maybe they didn't see the added liens.   Either way, that would of been a costly mistake on my part.

The night before the auction I went through and reviewed the properties I was going to be bidding on and guess what.... almost everyone had been redeemed.  My list was now down to 6.  So all the time spent reviewing these properties and the money spent in gas and paying the sitter was a waste.  I should of waited until about two or three days before the auction and then see what was still available.

But no worries.  There were still 6 opportunities.  As luck would have it one of the ones I was bidding on was on the first page.  It was a decent 3/2 in a Class B neighbor hood with an attached garage.  It was currently occupied, the landscape was in great shape, and from my external inspection it seemed like a great property.  The county assessment on it was around $67K.  The comps in the area were around $110K.  The bidding began and before long I had reached my $50K budget.  Moments later it sold for the mid $60Ks.  The remainder of the properties I was interested in were near the last two pages.  But I tried to review each property and get a feel for what people were paying.  There were some homes that sold for under $10K.  Granted I did not drive any of these so I can't speak to how great of a deal it was.  They were small homes in the bad area of town with low county assessments. 

I kind of had an idea of what was going to happen when the remainder of my properties came up... I would get out bid.  And that is exactly what happened.  Now granted the winning bidders got great deals but it was more than I had to invest.

I am now trying to adjust my strategy.  I either need to save more to invest or focus on lower end houses.

There are some great deals at the tax deed auction.  I saw one home that was a 4/3, 2855 SF, with a pool in an amazing gated community go for $205K.  The Zillow value was around $360K.  I tried to go inspect this one but the damn gate guard would not let me in.

I really want to buy my next property before 2018.  It has not been easy but I will not give up.

Take care everyone.

Mike

John, you are correct that is one option.

But for me to make this scalable I will need to get my capital out as quickly as possible. My hope was to use this in conjunction with the BRRRR strategy. From what I have read is that banks will not let me do a refi unless it has title insurance.

I am going to take part in this months tax deed sale.

I've reviewed the results from the last 6 months and the results are all over the place. I see people paying around Zillow estimates (Bad idea in my opinion), I see investors purchasing right around the ARV, but... I also see some great deals that go for 30-50% of the ARV.

I've spent the last few months educating myself on the laws, rules, and processes of tax deed sales and feel like I know the system pretty well.  With that being said.... Are their any investors locally that would like to sit down and chat. 

Here's how I understand the process:

1. Someone does not pay their property taxes
2. After a year the county auctions off a tax lien for the back taxes to the person willing to take the lowest rate of return.  In Florida the bidding starts at 18%
3. After two years if the taxes are not paid the lien holder can file for foreclosure on the property.
4. At the auction the starting bid is for the taxes owed on the property.

Of course there is a lot of research in dealing with these types of auctions.  There are some liens that survive the tax deed auction.

1. Government/IRS
2. City/County (nuisances, etc..)

You need to physically drive the property.  Google maps might show you a house that burned down a year ago.

Title chain is also very important.  The county MUST notify any lien holder of the upcoming auction.  

You are also going to have to quite the title which takes time and money.

Thanks,

Mike

David,

Thank you for the information.  I've reached out to the handful of attorneys that I know to see if they could refer me to someone with more knowledge on this subject.

I found one property that has no liens, no mortgages, etc...  Looks like the taxes were not paid the previous year and some mega company purchased the cert that year.  It also looks as if the owners passed away two years ago and the property is in an estate.

Hello everyone.

I just got a noticed that my county will be conducting their annual tax certificate auction.

I downloaded the list and narrowed it down to areas I'd be interested in.

What are the pitfalls of Tax cert auctions?

The way I understand it is that you bid down the percentage that you are willing to take.  If you win you then you basically have a lien on the property.  If the owner pays the delinquent taxes, the interest is calculated and a check is distributed to the cert holder.  If the owner does not pay, the cert holder can then file for a Tax Deed Application after two years (I assume you would also want to purchase the lien the following year).  This starts the foreclosure process.  If the property does not sell at foreclosure the tax cert holder is required to take deed to the property.

Also, what happens if there is no mortgage on the property?  I found one single family home that does not have a mortgage.

Thanks everyone.

Mike

Can someone help me understand the refinance part of BRRRR. I know the general principle is to refinance the property and pull out the cash to pay off any debt (Hard money lender, rehab costs, etc...). I have a $50K HELOC against a rental property that I wanted to use to purchase another rental. I am currently looking at a property with a purchase price of $30K. It will need around $15K in rehab costs. It should conservatively rent for around $800 per month. The ARV should be around $75K.

I just called my bank to make sure I was not missing anything when it was time to do the refi. The loan agent said that they do not do cash out refi's on rental properties. My only two options would be another HELOC or a fixed 15 yr equity loan at around 9% interest.

Am I missing something or is it just my bank (Navy Federal Credit Union)

Thanks,

Mike