All Forum Posts by: Nick L.

@Dan K.

Some investor-friendly local banks at the moment are:

- Landmark CU

- US Bank

- Anchor Bank

- TCNB

- Waterstone

- North Shore

- Spring

- Equitable

- Pyramax

@Konrad R.The uncertainty is part of the reason that the price is often so attractive. 

I recently found a sheriff's auction similar house to yours - looked in decent condition as far as I could tell from the exterior and peeking through a window, and the price was about 50% of what it would go for at retail. Like @Percy N.suggested, I figured there was room in the budget for a big rehab if required. 

On the morning of the sale I discovered that last winter a second story water pipe had burst, filling the house with water that spilled right out of the first floor windows. Between the mold, structural consequences and ruined mechanicals, that house is probably worth more scraped than rebuilt. So I got a lucky escape from that one - some other sucker bought it.

With that said, there are often ways to find out about properties before auction. You can give a tenant $20 to let you in. You can talk to an agent who had it listed recently. You can call utility companies to see whether the heat is on. So you always take something of a chance but you can often stack the odds in your favor.

This guy has the right idea: https://www.biggerpockets.com/forums/223/topics/273207-successful-sheriffs-sale-was-the-only-guy-there

@Chris SeveneyIn theory the bank will only sell to you if they have clear title, just like a regular REO. But since you are only getting a QCD and mistakes happen all the time, it would be wise to run a title search to make sure.

@Andrew TaylorSo you need @Mark Graziano's figures for a detailed analysis, but based on a rule of thumb you are at 1.25-1.3% rents as a percentage of purchase price. Generally speaking that indicates a modestly positive cash flow. Whether that's the best deal you can get in your market is up to you.

As to why someone would sell - a million reasons. He's trading up, he's run down his IRS depreciation schedule, he's getting divorced, he is a bad property manager, he needs the money for a sick relative, he found a better deal, he bought the place for a low price years ago and is cashing out, he is moving to Aruba... who knows. The question is whether or not the property works for you.

@Hannah Nguyen

> Can the court disapprove the sale

I don't know Maryland law specifically, but it's logical to think that if a sale requires judicial confirmation there is the chance that it will be rejected. In WI the general rule of thumb is that the sheriff's sale price must be at least 2/3 of the fair market value - however that is determined.

> Is there a possibility that the current title owner hasn't paid the condo fees for years and the bank will just give me the QCD at closing

Great question. I have spoken to representatives at auction.com who have assured me that their sellers would never close the transaction unless they were in first position with a clear title. However that is not the way the contract reads. According to the contract, you get a QCD for whatever interest the seller possesses - which may be nothing at all. 

As I indicated above, I refused to sign the contract until I at least knew that the seller was on the chain of title. (I also had a title search & hold report showing there were no superior liens.) In your case you could do the same or you may have to take it on faith that the seller's representations of ownership are true.

@Andrew TaylorCan  you describe the type of area and the type of tenants? 

People often use a shorthand scale, where A is white collar tenants with good credit, B is upper blue collar/lower white collar, C is working class and D is people with bad or no jobs and credit. A similar scale applies for neighborhoods. 

Better neighborhoods and tenants create more long-term appreciation potential and less grief in owning the properties. So investors accept a lower cash flow for owning them.

From the figures you posted so far I am going to guess that these are C or D properties, perhaps in a small town.

You could check with your LL insurance that this is ok. I am sure they will have no problem as long as there are no liability concerns or fire hazards. You might want to require the tenant to carry tenant insurance too, if he doesn't already.

I had a tenant who wanted to run a candle-making business out of the basement. I was expecting a hefty insurance rider, but to my surprise my insurance company approved it at no cost.

@Sam EricksonLooks like you were right on the money! Another win for you. This is shaping up to be a great project for you.

@Sam EricksonGreat story and thanks for the update! You definitely got a leg up by knowing the property well. Sometimes I browse Racine Co foreclosures but since I'm not a local and it's a tepid market, it's hard to tell the champions from the nags.

I am not so sure about your self-help eviction strategy. You said the former owner had moved out in July 2015 but I would think he'd have an argument for claiming he still occupied the property if his stuff was in it.

 In WI if you get the deed for a property that is still occupied by the former owner, you need to go through an eviction process. You can speed this up by having the plaintiff file a writ of assistance at the confirmation hearing. http://www.nolo.com/legal-encyclopedia/wisconsin-f...

It's definitely good that the sheriff's deputy supported you. I personally would still want to go through the correct process though, just to cover my ***.

Vinyl plank - medium quality or better. It's very durable, waterproof to a reasonable degree, can be replaced piecemeal in case of damage, and looks convincingly like wood, tile or any other material you want.