All Forum Posts by: Michael O'Byrne

I live in Houston and have also visited Galveston on occasion over the years.  We also used to live in Beaumont and would make the trip along Crystal Beach and cross over on the Port Bolivar ferry.  My opinion is that development will continue to be slow.  Galveston seems to be very closely tied to Houston's economically.  It is not a stand-alone tourist destination and will likely not ever become one - it's a typical Texas beach on the gulf with brown water, rocky bottom, and multiple oil spills over the years.  It's a decent enough place for Houstonians to get away for the weekend once or twice a year and have a good time, but it's lacking really great restaurants, 4-5 star hotels, and recreational activities.  So as far as appreciation potential I would say Galveston is like Houston in general - moderate but steady growth currently, with the potential to ramp up quickly if the energy economy starts booming again.

Does anyone have experience with how the IRS recovers an income tax lien when the property goes through foreclosure?  This was a foreclosed Fannie Mae property when we purchased it through a wholesaler. and evidently the IRS filed the lien before the trustee auction.

In looking over the my Owner's Policy from when I bought the house a year ago, this item is listed in the exceptions:

"k. Assessments, charges and liens as set forth in the documents: 

Payable to: Atascocita Community Improvement Association, Inc. 

Recording No: Harris County Clerk's File No(s). E093167 and G042159."

I tried looking up the file numbers on the Harris County Clerk website, but the images are not available, have to call the microfilm repository. This refers to the HOA, and I can't imagine they are owed $23,000. Here is the info passed on by the title company handling the current sale:

"The record discloses a Federal Tax Lien against (name removed) recorded in/under Clerk's File No. 2011018xxxx which is inferior to the lien foreclosed by Trustees’ Deed recorded in/under Clerk's File No. 2013052xxxx. This tax lien was filed more than thirty (30) days prior to the Trustee’s sale. The Company must be furnished for its review a satisfactory: (i) release; or (ii) affidavit by the sender or written statement of the Special Procedure Chief, that sufficient notice of the Trustee’s Sale was given to the Internal Revenue Service. If the Company is not satisfied with the documents furnished, the Policy will except to the lien. If the Company is satisfied with the notice given and less than 120 days have passed since the sale without redemption of the United States, the Company will except to the right of redemption in favor of the United States. (ADDRESS ON LIEN MATCHES ON SUBJECT PROPERTY)"

My big concern is that this mess will hold up the sale of this house.  We have a cash buyer and were scheduled to close on July 31.  The current title company is researching the issue, I hope they can find a release of lien somewhere.  Maybe the last two title companies did, and that's why this has never come up before.

Thanks to everyone for the valuable feedback!

We are are flipping a house and just put it under contract with a buyer. Their title company just informed me the examiner found a recorded tax lien from a few years ago of over $23,000. The house has been sold twice since then, the most recent to me about a year ago. So why would my title company give me a commitment for title insurance with this lien on the books back when I purchased the property? If they missed it, are they liable? Just looking for possible explanations and options, thanks!!

Just an idea - Why not focus on neighborhoods in major cities that are in early or mid-transition?  It can be competitive and carries higher risk, and you would probably need local boots on the ground to find and chase the deals, but you could land some affordable properties now that would pay off big in 5 or 10 years and would provide solid cash flow in the meantime.  

Hi All, 

I am currently rehabbing a house sitting on 1 1/2 lots. The first whole lot is fenced, the half lot is comprised of the south half of the adjacent lot. In this subdivision, if the owners on either side of an empty lot agree, they can split the lot, each purchasing the half that is next to their property. Since the HOA won't allow rezoning whole lots into half lots, both parties must be in agreement if at some later date they want to sell off their half lots together to a buyer, splitting the proceeds.

The whole lots are large, about 12,000 sq ft.  Lots of that size in the area, which are typical, are going for about $20,000.  The lot between our properties is completely cleared, and grassed as both parties have kept their halves maintained.  

While I was rehabbing this house, the other house went through a foreclosure.  So I was thinking of finding the new owner (or bank, since I cannot find out who actually owns this property now) and either a) offer them cash for their half lot, or b) sell them mine.

My lot is currently fenced, and orginally I planned to expand the fenceline to cover the half lot, thereby making a huge backyard and a stong selling point.  However, now I'm not sure if that huge back yard would entice a buyer to pay enough to offset what I could gain by either selling my half lot, or buying the neighbor's half and selling it as a whole.

My inclination is to buy the neighbor's half lot since it seems reasonable that combining and selling an entire empty lot would net more profit, assuming I can get the other half for a reduced price (vs. the typical price of a whole lot divided by 2).

Of course this is assuming I can find out who now owns that property.  

Any one have experience with anything similar, or any thoughts regarding this?  Thanks much!

I have used Value Windows with good results.  They make replacement windows onsite, in the $200 - $250 price range for single-hung, vinyl double-pane, energy efficient windows.  It takes them a few days to make, but they are all made to order. 

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As always, I am loving the honest and candid feedback here.  Based on all of your responses so far, I will research some highly recommended listing agents in the area and conduct interviews.  

I did order an appraisal a couple of weeks ago, so I should have the report back within a few days - this will serve the dual purpose of a pricing reality check as well as suppporting evidence at the upcoming ARB property tax review.  The HCAD tax appraisal was almost $490K, which I consider to be way out of line. 

If we don't receive any offers in the next few days, and the interviews go well, we will likely hire a realtor.   If the appraisal shows we are overpriced for the area, we may try another price drop first. 

Thanks again, BP community!!

First, here is some background on this deal. My wife and I are new investors located in Houston.  This is the second home that we have rehabbed.  I thought we made every mistake in the book on the first house, but after living through this second project, I now realize we hadn't even scratched the surface of stupid.  I intend to write a detailed post mortem regarding this deal to help other newbies from making the same mistakes, but for the sake of brevity, here is the short list:

1) We bought a +$400K ARV house in a $275K neigborhood. This was an REO, and we paid $170K with a rehab budget of $82K and an initial ARV of $315K. Based on these numbers, we paid too much. However, after the lender's appraisal, it was discovered that the house was almost 1,000 sq ft larger than what was recorded, boosting the ARV to $415K. We were already under contract, so this may turn out to be our only saving grace.

2) Extensive work was needed, over $100K in rehab in all, much more than we should have taken on as inexperienced investors.  

3) We took the wholesaler's recommendation on a general contractor.  The pitch went something like this:  "We have a long list of vetted, quality contractors that work exclusively for our investors.  They know that if they don't perform, we will stop giving them work".  As it turns out, the guy they recommended had never worked for them before, this was his first job for them.  And we trusted him.  After the dust settled, we were eight months into what was originally a two month project and were $40K over budget.   We fired the contractor in month four and it took us another four months to complete the project and correct all the mistakes, shortcuts, and bad workmanship.  

4) We over-improved for the area, believing that luxurious touches would hypnotize that perfect buyer with deep pockets who just couldn't live without this house. After all, who could walk away from a six-burner Italian gas range and an apron sink?

5) Oh, did I mention that we took out a hard money loan to buy and rehab the property?  Nothing like writing a $3,000 check every month for almost a year.  

Like I said, this is the short list.  I want to make it clear that I don't blame the wholesaler, or even the contractor.  We simply didn't do enough homework and due diligence, and that's our fault.  We didn't seek enough advice from other investors, and we let our emotions overrule the numbers.  The good news is that we learned some priceless lessons that we had to learn in order to succeed in this business, and we are very thankful for them. 

So, we finally put this house on the market two months ago, opting for a FSBO approach that included an additional fee for listing on the MLS (HAR, Trulia, etc.) and also a contract negotion add-on from the broker who physically listed the property and manages the listing, e.g. price changes. All in we paid about $1,200 for the package. We offered a 3% commision to the buyers agent. We listed the price at around $480K, and had lots of showings the first month but no offers. At this point we have dropped the price by over $50K, and the showings have dried up. We went with FSBO to save on the commission because we don't think that a listing agent is going to be able to anything more to market this house than an MLS listing. At this high price point, I'm not sure how frutiful other marketing efforts would be, e.g. open houses, flyers, Craigslist etc. Not too many buyers want to pay this much for a house, plus this house is almost 5000 sq ft, further narrowing the field.

So my question (finally!) is, should we go with a listing agent to market and move this property? Will they do anything besides list it on the MLS, which we have already done? Or am I better off keeping the FSBO and continue to drop the price until it sells and just take our lumps?

I am looking forward to your thoughts.  Thanks for taking the time to read through this!

I'm facing this same dilemma with a finished flip property that we put on the market a couple of months ago in Houston.  The county recently appraised it for $489k, over $200k more than what we paid for it.  I have filed a protest and am waiting on the ARB schedule.  I opted not to use a service like O'Connor because I don't want to cut a check to them for a $1000 or more for a property I am selling.  I am having the house appraised this week for $425 and will use that as evidence at the ARB.  However, I am assuming that if I sell the house before the ARB that I will be on the hook for the full tax bill as appraised by the county.   I'm sure this is a common situation for investors, but this is the first time I've had to deal with it.