All Forum Posts by: Roy Oliphant

@Ndy Onyido 

It does seem there are more bidders coming to the tax auctions every month.  We have noticed significant increases in attendance (and prices) in Dallas and Tarrant; Harris has been competitive for a long time.   That said, it still depends on your objectives.  These counties still have a large number of properties every month, have easy access to contractors for repairs and have diverse renter communities so the properties can be made to cash flow easily.  Not to mention how many markets can you stay informed on.  I can guarantee a 900 sf 1940 frame in West Oak Cliff (Dallas County) should be evaluated completely differently than the same house in Iowa Park (Wichita County).

There are a number of counties in the Panhandle area that have had auctions recently.  These were probably less competitive than the big city auctions but so what.  If you acquire a property that cost twice as much to repair because you don't know the local contractors (and every house at the tax sale needs some repair) or takes for ever to rent because there s no economic driver in the community, are those really good deals?  They may still be but I think it is less likely.

Plus you have the issue that all of the auctions are held on the same day.  Can you afford to miss an auction that has 10 potential deals to attend one that has one or two? 

What type of properties you are looking for and what counties you would consider?  We attend auctions all over Texas.  Maybe we have something that would fit your goals.

There certainly have been localized (location and time specific) jumps in OK real estate. For example: Elk City 1980 to 1985; 1980 population was about 7500, 1983 it was estimated to be about 15000 and by the end of 1985 it was back to about 8000. There were several farmers who lost fortunes building houses to sell or rent into a boom market.  Rental owners, investing for cash flow couldn't find renters; builders had new houses and no buyers or at least none that could find a mortgage company willing to lend.

3 years of cash flow on a 20 year mortgage is still a disaster.  So was bull-dozing never lived in houses that had sat empty so long they were unsafe to occupy.

Just saying, if your buying 'boom' don't stand so close to get caught in the explosion. 

@Josh James 

I did not mean to imply all repair spending is at risk.  You are allowed to secure, preserve and maintain the properties during the redemption period and those cost become part of the redemption value.  You cannot enhance, upgrade or improve the property and expect to be able to recover those costs if it is redeemed.

The issue comes from what meets the definition of secure, preserve and maintain.  For example, is adding a smoke alarm so you can legally rent it 'securing' or 'improving'?  Smoke alarms are not a major expense so it may not matter.  But you need to know the difference, or at least accept the risk, if you replace broken kitchen counter tops

@Lorilyn B. 

You have received a lot of great information on this thread  We attend and buy at multiple auctions every month, fix, rent and then sell the properties to cash-flow investors who understand the issues with the redemption process that makes title insurance nearly impossible to get during the first two years.  It can be a rewarding way to invest but it is a lot of work. 

One thing I did not see mentioned is to make sure what tax years are covered by the foreclosure.  It is not uncommon to buy a property at auction and then owe an additional 1-2 years of taxes that came due after the lawsuit was filed. 

Also, remember that any money put into upgrading the property is fully at risk until the redemption period is complete.  If the property is redeemed, they do not have to repay the money you spend on upgrade.

Still, Texas is a great place to buy tax deed properties.  We just completed our 100th tax deed property and looking to do a lot more of them in 2015.

Ok.  So I get all real estate is local and location, location, location.

'Driving for dollars' makes sense to me on a basic level; Learning about a neighborhood, looking for FSBO's and rentals, or looking for distressed properties.

Is this still profitable/necessary in the connected world?

What do you look for when you go?

How do you tell a potentially distressed property from just driving by?

Thanks!

 As I read this thread, I kept thinking 45-55% of what?  Of course, the answer is rent revenue.  But that begs the question; Are my expenses to high or is my revenue to low?

I agree the actual number is probably different for each investor depending on their goals, time, type of properties, etc.  So my question is 'When the ration gets out of balance what 3-5 things do you, as an experienced investor, look at to see what needs to be fixed?'

Taxes are $65 / yr on a $135000 property?  I'm going to move to where ever this is! 

I think it depends on your goals.  If an 8% cap rate fits what you are trying to achieve, then it may be a good deal.  I just turned down two deals with cap rates >10% because I need at least 12% to make it worth while.  Your mileage may vary.

41% ROI seems promising except using the hard money on a two year loan. What happens if you cant get it refinanced? What is your ROI for the two years if you lose the property and your $10,000 down payment? I'd want to know how many times the current owner and his hard money friend has sold this same deal in the past.

Just my opinion but I agree that there is a market for smaller homes for the older single and empty nester markets.  Once we get past this energy bubble and cost return to their economic levels, maintaining a <3000sf home just doesn't make sense when the kids have established themselves.  I think the true tiny house market (>600sf) may be a fad but >1000sf can be very comfortable and much easier to maintain.  Building technologies that allow for flexible floor plans that can be easily changed along with low maintenance and high energy efficiency is where I am trying to define a model.  This also has the benefit of fitting into most inner city neighborhoods where reclaiming lots is possible.

Good luck!!  As another newbie, I'm very interested in hearing about our experience.  Please keep us updated.

Hi Natalie,

I'm looking into a similar strategy in Texas.  However (and even more so after reading this thread) I'm looking to acquire the properties through tax auctions.  There seems to be a real aversion to purchasing mobile home properties because the mobile home is often personal property even though it is on the tax roles.  This means you will get the land but the MH will still need to be dealt with.   Some properties are selling for less than the cost of improving a vacant lot (running utilities, grading, driveway, etc.)  So I'm looking to get them cheap and remarket them to new owners.  We already buy houses at tax auctions all over Texas so this will just be an incremental revenue stream but I have high hopes for it.

I'm all for anything that help provide more quality housing at affordable prices.  Mobiles, tiny's, non-traditional construction, etc., will all be important to meeting the housing needs of the future.  Glad you are looking to help this, too!

Roy