All Forum Posts by: Roy Oliphant

@Tommy Nyle Morgan

Sounds like a nice purchase.  Great thing about Texas is you have immediate right of possession after the tax sale.  You should contact the occupant ASAP and let them know they have a new landlord; even if they are the previous owner.  We do this by posting a notice on the front and rear door.  Almost never fails to get a call back.

You will likely not be able to get title insurance for at least 2 years.  Still, this property should produce a nice cash flow for during that time.

@Jeremy K.

Leverage is 101 in RE investing at almost all levels.  Biggest risk is cash flow if the underlying investment quits paying.  For example, if I borrow 80K to buy a 100K rent property and value of the property falls to 60K, I don't get hurt if I can still cash flow the payments to be able to hold the position until the market recovers.  However, I lose if I am forced to liquidate the property at 60K because I can not maintain the payments.

In your scenario, so long as you can maintain the loan payments if the note fund stops performing you may be ok so long as there is equity to return your investment in the future (including the additional investment made in covering the loan payments).  The problem for me in this is that if the notes become non-performing, their value drops and it is unlikely to recover.  Thus the risk is in the underlying notes and how likely they are to perform as expected.  A note fund paying 10% probably has some high risk assets.  Not to mention that in a market of rising interest rate, these assets are going to trend to lower value.

Based on your comment about the down payment on a rental property, you are talking about investing 20% of your assets in a high risk investment for a 3% gross return. I suspect this will be taxed as ordinary income and you are already in a higher marginal bracket.  I think if you look hard enough, you will find much better opportunities in the Denver (or other) markets.  

@Micah Harris 

As to tax overages, this is state dependent. You need to know the law for the jurisdiction you want to work in.  It is not always 3 years. For example, in Texas the right to claim the overage expires in 2 years and you must be an attorney to help someone recover it.

On a 2016 sale you will be buying only a lien and not get even a tax deed for two more years.  Yes it can be redeemed by the heirs.

@Kiet N. 

This matter is very much within state code as that is the controlling entity for property taxes.  You need to research redemption period (in GA that is 13 months) and contestability periods to find out when the owner's or others right to impede your ownership expires.  If you are looking to invest in tax properties, you will eventually need a lawyer familiar with these statutes in the state you invest in.  Probably best to get that relationship established early.

@Michael Lazzizzera

One thing to consider is do you want your name in the title chain on what may be an EPA challenged site.  Even purchasing as a tax deed can make you liable for any cleanup 

Otherwise, commercial properties are different in Alabama and some even hold that ANY expenses you have on the property are unrecoverable at redemption.  You will want to verify the current zoning to see if it can still be used as industrial after a change in ownership. That may restrict any potential revenue streams.

@Bonnie Y.

Congrats on starting your investing.  You have chosen a very challenging area.  Tax sales are very state specific and the rules vary greatly between jurisdictions. 

As to the recoverability of your renovation costs, most jurisdictions allow for some renovation costs in some instances.  What is recoverable can be different even in the same state depending on the property, location and use.  Generally, recoverable costs have a VERY strict limit to repairs required to maintain the property.  For example, repairing a broken or unsafe countertop with similar materials may be ok; replacing a formica countertop with granite probably not.

As to how often the property may be redeemed, many factors affect that; is there mortgage, are the previous owners alive, etc.  For tax deed sales ( I assume from your description that is what you are asking about) 10-20% redemptions is our experience.

Pitfalls include improper or incomplete notice of the sale, same for after the sale in some places.  Illiquidity, over improving, and scam redemptions may be also concerns until you get clear title.

@Fran Lind

Trying to figure out why you care.  I assume the payments missed were to you M-I-L? Else, if she sold it, let the new owners worry about figuring out how to pay the taxes.

@Dustin Robideau

If your best investment is in the least desirable place, you should probably look at East St. Louis, IL. 

If you're looking for a truly investable area, almost anywhere along I-20 (Texas to Georgia) is a good place to start.

@Polina Kin

If the Ebay seller was truly just a middleman and didn't own the property, I would report him to the Alabama Real Estate commission for acting as a broker without a license.  If he is a licensed agent then file a claim against him that way.

If he was selling a property that he did own (he was not just a 'middleman') then he should be ale to sign a corrective deed or is potentially guilty of fraud.

Hope it works out for you.