All Forum Posts by: Ori Skloot

Thanks @Jay Hinrichs   It's a big piece of dough - to pay off the taxes would be about $100k.  My concern is that during the probate proceedings someone could come out of the woodwork and make a claim on the estate of one of the partners.  Then what would happen?  Also, while we are waiting for probate proceedings I probably shouldn't fix up the place, right?  In it's current condition it's not livable so I couldn't rent it out. 

Hey folks,

I'm looking at a tax deed sale in CA.  There is one particular property I would like to buy before the auction.  Here is the rub:

Property is held in title by a Partnership: Johnson and Cooper Properties

One partner, Johnson is prepared to sell.  The other partner, Cooper, is deceased and his estate has not been probated yet.  Coopers' heirs, two children, are also prepared to sell.

There is a partnership agreement, but it states that upon the death of a partner his share shall go to his estate.   Title company won't offer title insurance without a partnership agreement naming the people specifically who would inherit, or with the estate going through probate.  Of course there's no time for that.

The only other option I can think of is sign a purchase agreement, have title transferred to me using quit claim from all the parties, pay off the tax lien portion, then wait for them to do probate of the estate.  Once probate is finished and it confirms the heirs, I get full title somehow (not sure how this works) and pay the balance of the purchase price.   I'm sure this is fraught with issues and I don't even know if it works.  Help!!  Any better ways to structure this?

Thanks so much in advance. 

I somewhat agree with @Jay Hinrichs   I wrote another post about my experience so far.  Here is what I posted-

I'm by no means an expert. Here are the major pointers I have discovered. PM me if you want to connect and talk about idea.

• You can't get title insurance immediately if you buy at tax auction. That's fine if you plan to hold, but won't work so well if you want to buy and sell.
• Yes, my understanding is that if the IRS takes the property then they would pay you the money you paid back and interest. (if anyone knows otherwise please correct me).
• Probably the most important point - I have bid and followed closely a dozen local auctions. 75% of the time the properties are bid above what I think they are worth. So there are deals there, but you have to be very, very careful about knowing the numbers and sticking to them. In particular it appears to me that raw land gets overbid.

@Chris Mason I second Chris. I am working with him on getting s loan right now and he is awesome. 

Hi Sasha,

I'm interested in East Bay properties.  Please add me to your buyers list. Tnx 

@Taye N. I have some experience with tax deed sales in California.  I'm by no means an expert.  Here are the major pointers I have discovered.   PM me if you want to connect and talk about idea.  

•  You can't get title insurance immediately if you buy at tax auction.  That's fine if you plan to hold, but won't work so well if you want to buy and sell.
• Yes, my understanding is that if the IRS takes the property then they would pay you the money you paid back and interest.  (if anyone knows otherwise please correct me).
• Probably the most important point - I have bid and followed closely a dozen local auctions.  75% of the time the properties are bid above what I think they are worth.  So there are deals there, but you have to be very, very careful about knowing the numbers and sticking to them.  In particular it appears to me that raw land gets overbid.

Hi Yesenia,

"At what number do you see a deal"  - I think it depends on what you would plan to do with the house.  If you were to move in and hold for long term then the discount you would need would be much less than if you were to flip the house.  If are looking to buy and hold it may be difficult, the rents will probably not cash flow unless you get a steep discount.

Also, sounds like it needs a complete remodel, $75k sounds a little low unless you are a G.C. and can get the work done for cheap. 

If she doesn't have a realtor representing her yet, then that could potentially save her 5% (typically 2.5% each for listing/selling agent).  There is also her cost of needing to either sell it as a fixer/upper or do the repairs herself and then sell, so if you are willing to buy "as is" you should get a discount.

I've bought/sold houses and done remodels in Fremont so I am familiar with the area.  I have more thoughts on your deal, feel free to reach out directly to me if you want to chat and get more input.

Hey Chris,

I don't have personal experience with this, but I've looked into it a bunch.  Below are my answers based on what I learned (disclaimer: these are my opinions, I'm not an expert at this question)  If anyone knows otherwise please correct me!

• I have heard of lenders doing this, but that they charge an interest rate that is associated with loaning to an LLC, not an individual. Is the lender offering you a rate that is the same as if you were taking title in your name?
• I spoke with a title company about this and they indicated that it wouldn't be a problem for them, so long as it's ok with the lender.
• Regarding problems down the road with the lender selling the loan - that's really on the lender I think, not on you.

Thanks all for your helpful responses.  I started looking into options and costs for hiring a PI.  I didn't get too far because one day recently a construction crew drove up and started working on the house.  I discovered that the owner hired an real estate agent who is renovating the house and putting it on the market.  Called agent who said they will not take off-market offers.  I'm very curious to see if they disclose that the murder occurred at the property.   Very strange.

Hey BP community -

I need some help thinking about how to best structure a commercial deal. I'm looking for that creative BP spirit to help make this one happen! 

Here's the situation:

Owner is selling a service business and the building where the business operates in Alameda county, CA. The building is built-out for the specific use of the business, so the two are very tied together. In other words, can't pack up the business and move it elsewhere.

Owner wants $2M for business and building. Building needs $250-300k in repairs, and until the repairs are done the business is losing about 50% of its profits. With the repairs done the business cash flows nicely (including debt payment on loan for purchase) and I think $2M is a good deal.  Without the repairs it is breaking even and owners are currently not getting any profit (I know this because I have seen their books and tax records).  Owner has owned property and business for decades so property tax basis is very low.

Here is my first thought at structuring the deal:

• Offer Price $2M.
• Owner carry back of $200k loan, 30 year amortization and 5 year balloon payment.
• I take out an SBA loan of $1.7M, put 10% down or $200k (I understand that most SBA lenders require 20% down. I’m hoping the lender will accept the owner carry back as the other 10% down)
• Owner credits back $250k for repairs and I do the repairs.
• Owner credits back $100k to account for lost revenue until repairs are made and business is 100% operational.
• Issues with this structure: I somehow doubt the seller will go for it, my property tax basis will jump up $2000/month, I think it may be tough finding financing for the deal given the large amount of repairs needed and the consequential drop in income over the past year.

Here is an alternative idea:

• Buy just the business and not the property (not sure what the right $ amount would be)
• Get a loan for the purchase of the business
• Sign a Leasehold of 34 years for the property (so it is not considered change of ownership by Assessor’s office and does not trigger new assessment of property tax).
• Owner credits back $250k for repairs and I do the repairs.
• Owner credits back $100k to account for lost revenue until repairs are made and business is 100% operational.

Is a lease hold an idea worth exploring? Anyone have a success story doing a deal with a leasehold?

Any other creative structure ideas?

Thank you very much for any input!