All Forum Posts by: Michael Randle

@Wayne Brooks So what is the advantage for someone to buy the tax certificate in FL?

@Elvis Vasquez Then you are saying if I buy the tax lien I have no right to the property? Why would they (the government) even offer to sell them if no one is going to buy them? It sounds like someone would have to wait for the property to go to tax-deed auction? Where can someone find information about that process or a list of properties that are up for auction?

So I have been researching the idea of Tax Lien and notes and for ease of gathering data I have been using Miami's city run website that lists all the past due tax amounts. I am just trying to feel out how the process works and I came across the following situation and as the old saying goes (if its too good to be true...) this looks too good/easy. Where am I going wrong in my thought process here?

https://bidmiamidade.com/main

Account #:

3122020444010

Listed as Oceanview condo: 19390 COLLINS AVE UNIT: CU-O Sunny Isles Beach, FL 33160-2200

https://www.miamidade.gov/propertysearch/#/?folio=...

The lien is listed at $21.94. Yet 1/1 condos at around 1k Sqft are going for $240,000.00 (https://www.redfin.com/FL/Sunny-Isles-Beach/19390-Collins-Ave-33160/unit-1504/home/43318747).

So why would I not grab that lien, drop $200,000k into the condo, and turn around and sell if for $240,000 and make $40,000k?

There has to be some sort of huge obstacle preventing people from doing this that I am not seeing.

Help educate a newbie Note/Lien learner by pointing out what I am missing.

Thanks!

Thank you all for the information and I am kind of getting a clearer picture of who/why people would go down the tax lien road. Although I do not see how the guru's promise the 15% government insured returns, I am starting to see how people COULD make money with them.

So when I buy a tax lien I am the first hold collector on a property when it is sold. This also gives me the ability to evict a tenant that is in the property. (All based on the local laws of course).

Or I could buy a property with a tax lien and fix it up to stabilize, re-sell or add to my portfolio. (again based on local laws).

Am I missing any fundamental issue that might throw a wrench in my logic?

Thank you for the input so far. 

It sounds like you get the property rent/sale ready and then flip it and put it on the market.

Is paying off the taxes the "buying liens" terminology I hear thrown around at times?

I want to throw out a few scenarios to you guys and see what you respond so I can make sure I am understanding things.

John Smith owes the bank $100k and didn't pay back taxes for 2016/2017. I 'buy the tax lien', what rights do I have to the property? Obviously the bank will want the $100k it is owed, and John Smith doesn't want to move out.

I assume if no one is living in the property and no money is owed to another lender then the property becomes mine, much like a foreclosure. Do I have the right to fix and flip the property (I assume so after the above comments) or can I develop the land etc?

What about the 'government guarantee'?

Sorry if this is getting into the weeds, but these are just the questions that come to mind when I here the idea of tax liens being thrown around.

(edit)

Obviously some of this depends on the local laws but I am looking for a general sense or direction.

Occasionally I see people who invest in Tax Liens or you hear on the ratio 'Invest in government guaranteed tax foreclosures blah blah guaranteed 1,000,000% return on investment'.

But I am interested in what/how people invest in this area.

I know that if someone does not pay their local taxes the city can foreclose on them. But besides this step one I do not know how people make money with this whole process. I know there are primary and secondary liens etc etc.

If someone can point me into a non-bs (non-sell me something or some service) direction as to how an investor makes money when people stop paying there taxes that would be greatly appreciated.

Thank you!

I have been thinking about the student rental strategy a lot myself lately. 

It sounds like you need to have a GC lined up so he can tell you the details about the time frame for when HE can get the house done and ready. If it takes him 3 months to get it up to par doesn't matter if you close in June since it wouldn't be ready either way.

It seems to me (theory craft only) you want the house ready for move in around 1 month prior to school start. This way parents that come with their kids to check out the college and area can walk the apartment themselves and see where their precious snowflake will be partying on the weekends (errr...studying...that is what I mean). This will probably only be for the first year students who want to live off campus.

There is probably a niche market for students who come to town at the beginning of summer (either for school or work), but that would generally depend if it was a college town or a major city that has work opportunities for college kids.

Also, if it is a major/competitive university you can expect some very last minute arrivals. The students that where put on wait lists to get in and where accepted last minute, causing them to scramble to get everything in place.

My gut tells me you want to close on a house in April, and be ready to sit on it through the summer if need be. This will get you access to the most amount of possible students. But if it is a good deal I would not sit on the sidelines if you are worried about not filling up the apartment for some reason.

I do not think there is a 'right' answer to this question until you get a timeline from a GC. Then you can start weighing the risks of your closing timeline window. Maybe your first year you have to accept non-college students and transition totally in 2019?

I would reach out to the local college and see if you can get a new-student summer schedule type handout. Then you will have an idea on when parents show up, classes start, last minute students, summer classes start, orientation etc.

My understanding is that refinancing is really CASH OUT refinancing. When you do that you now have more money to go an re-invest in another BRRRR unit and continue down the road.

Numbers for example:

Buy a house for $50k ($10k down $40k Hard Money lender or other)

Rehab the house for $15k

Rent the house for $500/month

Refinance the house for $80k (80% loan to value)

Repeat by taking the $15k you now have in cash into another house.

Now that is the quick and dirty 40,000 foot over view. And your numbers are going to change depending on where you are. And there are sticking points at almost every step that can throw you off. But in general that is the theory.

The sleepless nights should not start until AFTER your offer has been accepted. This just goes to show either A) You are still new and have not made very many offers or B) You are too emotionally attached to a property. BTW neither are bad things just that more experience is needed. 

When I was looking for me First/Second home I put in 2-3 offers a week and would worry about being accepted etc. Then I came to realize it is because of the A + B above. Now that I am on my third I have my agent fire off an offer and then sit down and start looking again. I would say after you close and stabilize your first home and you begin to work on your second will you notice that offers are a number games, and if you get rejected just move on to another. But getting over the emotional part of the equation is an adjustment.

@Kevin Fox, You are probably correct. I do not pay too much attention to CA and it was just a passing article on my news feed that mentioned it. 

But the skeptic in me says this is almost the first time (that I can recall) a liberal state and cities (LA, SF etc) would revert to a conservative economic approach (supply side economics) to fix a problem vs a rent control or government controlled type solution.

If this is the case and they really ARE allowing an increase in supply to help drive down over all cost vs attempting to impose government oversight I would sell everything and leave SoCal. Why? Because very obviously the big quack is coming and California is sinking into the Ocean, and Hell quiet literally might have just frozen over.

@Andrew Erickson, I have read (some) of what the ADU and SoCal cities are passing (LA and SD). My understanding is the the cities are allowing ADU to specifically address housing shortages and homelessness.

With that in mind I would be surprised if the cities do not put some sort of restriction on who can live in the ADUs. Max income, had to have been evicted, someone who is homeless etc. Why does this matter?

Well first a person who wants to put up an ADU and rent might have to fall under section 8 type restrictions. And knowing that it will probably be more weathly people that have (a) the land in the back yard (b) financial means to put up an ADU you are potentially restricted on who would WANT one in there back yard.

This is the whole flaw with this (SoCal) idea and not your business plan. The city is giving permission for the people that can afford (with both land and $) to, an opportunity to house homeless people in their back yard. So they are asking Middle to Upper class home owners if they would LITERALLY want someone who is homeless camping in their back yard.

So unless the ordinance has changed, or I am way off on my guess of the intent of these ordinances or how they are actually written into law. I do not know how many suburban moms are going to let a homeless person camp in the back yard with questionable ability to pay the monthly rent in order for her husband to say he is a real estate investor.

That being said, if I am wrong and these units can be rented out to anyone, and IF they pass the horrible zoning and code rules of SoCal, then you have an investor in me because I think the theory of what you are thinking of is great.