All Forum Posts by: Cheryl C.

I'll definitely get to the bottom of it Monday.  Just when you think you've seen it all....

I should pull the file and actually look at my latest tax bill as they separate land and improvements.  Frankly, the entertainment value is worth the 4K that I paid for the lot!  I guess you can surmise that I've been around the block and appreciate a good title issue!

I bought a lot at a tax sale about 12yrs ago.  I bought a number of lots that day and I've been sitting on them.  I called an agent yesterday to get them all listed as the Builders are back.  The agent called me yesterday afternoon about one of the lots.  She was going to drive over to take a look and told me the aerial shows a house on it.  I told her that there was no house (we drove past it after we bought it).  She must have the wrong lot.

So she just called me.  There is a house on it.  Habitat For Humanity built the house a few years ago.  She spoke with the people at the house.  It's 6:30pn on the East Coast so I can't get any further info until Monday.  I live 90 miles away so I'm not driving over.

Well, my tax assessment did jump (8 fold?) a few years ago and I called the County about it.  I figured that maybe it had been rezoned to commercial or something.  Anyway, this is a rural County and the tax appraiser is a contract worker so no one knew anything and there was no way to talk to the guy.

So ... maybe I own a 3yr old house. This could be very good or maybe I didn't get good title and lose my 4K.  Anyway, it's sounds like it's going to be very entertaining! 

@Linda Williams   also sent a colleague request.  I've got something in Stafford that you might be interested in.

After a little dry spell I've got 2 flips under contract in 6 days.  Both close 4/30.  My contractor will be busy but he has been crying the blues about no work.  #1 was a Hubzu, under contract after 2 and a half months of bidding.  I got it as a back-up bid and expect to net 60 or 70K.  The second one happened starting at 5pm today and ending about an hour ago.  An mls property came up at a crazy low price.  I ran the comps and bought it sight unseen.  It's just a condo (both are) and I have a pretty good idea of what it needs and how much it will cost.  I'm fairly certain that I'll net 50K. Both are in a hot area (Ballston for the locals) and should go fast. That's it for a little while, although I am selling 2 rentals in June.

My parents were the inspiration - mainly my mother.  My mother had small apartment houses; 4 or 5 units per house (Old carved-up Victorians).  It turns out that her mother had rentals.  It passed down two generations.  I first became involved at around 11 or 12yrs old.  I cleaned and painted and learned to be darn good at both.  I heard all the tenant stories and went with her to view potential acquisitions.

Oddly, neither of my siblings own investment property.  What happened with this, I have no clue.  They certainly wish they did but never took the plunge (they didn't paint for 50 cents an hour either).

We bought our first rental at 23 or 24.  My husband had no exposure to RE growing up.  These days, 30 plus yrs later, he is much like my father was - never answers the phone and absolutely never talks to a tenant.  Well, I don't like to talk to tenants either!  E-mail is the greatest invention ever!  The RE is totally my gig.  Anyway, having a head start from investor parents puts you miles ahead.  I've always loved RE.  Alas, my 20-something shows zero interest.

I'd still have 5Mil.  If I had no assets and no job to be garnished, I guess I wouldn't need insurance (the reason we all have uninsured motorist coverage).  I've talked to my agent about the limits and she thinks it's enough.  I hope so.  We were just discussing this last week. 

Owning the RE made me more aware of liability issues (as did my former profession -lawyer).  I had around 5 properties when I got the 1Mil coverage.  We were 25 and didn't think about insurance much.  At 30 it got bumped to 5Mil.

I don't think that insuring to your NW is the proper analysis.  What if the award is twice your NW?  They take your ins. and all your money?  What if your NW is 50Mil - you clearly don't need that much coverage.  I think looking at liability awards is a better method.  This is why our coverage hasn't changed in 25yrs.

@Jay H.

  Have you closed?  I'm under contract on one now and was wondering what to expect.  Anyone know what the buyer agent commission is? 

I'd get an umbrella even if I didn't have rentals.  What if you blow through a red light and kill a young surgeon?  Do you really want to only be covered up to the limits of your auto insurance?  What do you think a jury might award for his life-time earnings?  I suppose you could file bankruptcy.  On the rental front; what if a tenant dies due to your negligence?  I think that owning RE carries a lot of exposure.  I've carried 5Mil for the past 25yrs (1Mil prior).   I bumped it the day I read a newspaper article about a tenant's child recovering 3.8Mil because the hot water heater was set too high.  The child suffered burns.

An umbrella of 5Mil covering 20 properties, 4 cars and 2 boats costs me about 1K per year.

@Bryan L.

I would not buy anything on a Land-Contract (aka Contract for Deed) for the following reasons:

The seller may further encumber the property by obtaining more mortgage debt.  The seller may get judgment liens recorded against the property post your LC - ex. hospital, credit card, you name it.  This could end up with the property being upside down and the loss of your equity (I am assuming that you want the property for it's equity).

Along the same lines, what prevents the seller from selling the house out from under you during your LC?  You've recorded nothing in Land Records giving Notice of any Beneficial Interest in the property.  A bone fide purchaser for value w/o notice takes free of any claim by you.  Do you require proof the RE Taxes are being paid?

Does your contract state that the seller will maintain insurance and that you are an additional insured? Will this trip the DOS? Is it really a rental or is it a sale? If you have an equitable interest in the property, can you be sued for negligence (someone injured on the property)? If so, will your insurance cover you or claim you have no insurable interest. I sure wouldn't put myself in this situation.

I've always thought the whole "subject to" arena was the place of late night infomercials and fraught with landmines. I was totally onboard with the FHA and VA assumptions of yesteryear - but never these Land Contracts.

You state that little money is at risk. This likely (hopefully) will change due to appreciation. I would secure my interest by recording a Deed of Trust. In other words - do your Land Contract and record a DOT/Mortgage to protect your equity and be properly an additional insured. (just thinking out loud on how best to do this)

@Daniel Mawyin, it was just a drainpipe leak (old plumbing).

It's great that newer LL's can learn from the mistakes of some of us older ones.  I have 30yrs of education from the "school of hard knocks".  I wish this site around 30yrs ago!  I'd of saved a fortune!

btw - I inspect new tenants at 3 months.  That way I can nip bad things in the bud.  Setting expectations and following up on them is essential.