All Forum Posts by: Pete Harper

Quote from @Gaston Ortega:

Quote from @Bruce Lynn:

Personally I don't think you want to do this.

The experts on here will likely tell you that you don't need to scan 3000 county auctions.

You need to do the ones near you, where you learn and know the rules, can drive every property you plan to purchase.

Even in one state where the basic rules should likely be the same they seem to get implemented differently in each jurisdiction....so you really need to learn the specifics of that ONE sale.

I doubt there is any one software that scans all the auctions....almost every one in my area has some differences where it is not even easy to parse the data and get it in a spreadsheet in a simple format. Have to have a VA do that.

Personally I would not pay for the education from a national provider.  I've watch many videos online from them and attended in person their free training sessions.  I saw enough in the free sessions to understand they were not going to be useful and typically a gateway for you to buy coaching and perhaps software thru them.

I always say start with the county your are in or near.  Go to the auction, see how it works, don't go to bid the first 1-2-3 times.  See what people pay.  Learn the rules.  Talk to everyone.   You will learn in some places that have bid down, that the interest rate quickly goes from 16% to 1% on many properties.  You will see in deed states where the minimum bid might be $1000 for the property to go to $10,000 or $50,000.  You will find in deed states there is no financing typically that you need to pay cash money the same day....sometimes they'll take cashier checks, but often it is real cash cash....in Dallas County Texas just to give you an idea...they auction the property, and the minute that auction is over you step to the front of the room with the deputy that ran that auction $100K-$200K-$300K comes out of bras, boots, and briefcases and gets run thru a bill counter in front of everyone.  This while the next deputy steps to the podium and auctions the next property.

We're starting to see a few online in Texas, but not many...most of the time you are required to be there in person.  Typically one auction a month, but you might get lucky and make it to two.  If you are going to scan all 254 counties are you willing to attend an auction in any one of those counties?   Are you willing to hold the property for 2-4 years and pay taxes and insurance on it?

What state are you in....there are a handful of experts for various states on this forum so maybe we can send you to the right person for advice or training.

You might also attend your local REIAs and ask them who the tax sale experts are in your area.

For good general very very basic get started advice, read the 16% solution book.

Thank you @Bruce and @John Underwood . I was living in South Florida, for many years until 2020. I have 3 rental properties there. However, I I moved to San Diego County, CA. I started looking at the counties I can drive to. 

Here's my question/confusion: If I follow your advice and don't expect to take action in the first 2-3 auctions in my area, that sounds like not investing in 2-3 years potentially. I only see an auction per county per year here, at least from what I researched so far. The same applies to what I researched in Florida. I would like to begin researching and preparing to bid on deeds and plan to get paid interest when the property is claimed.

In order to get busy quickly, I thought I would learn about the states that pay best and faster, and use my relationships (i.e. my uncle in Dallas, and friends in Houston) to do research and participate in online auctions when possible, to, at least, prepare for one auction every other month, rather than once a year. This is why I found the software interesting, to dig through the rules and benefits of different counties, see the available new properties, then download them, filter, and begin the work. What do you think I should do to get into deed purchases from my area?

I will look into what the REIA is.

Thanks a lot!

Gaston.

Quote from @Matt Devincenzo:

What State and when is the lease up? In hind sight you should have inspected each unit prior to re-leasing to the existing tenants, obviously that ship has sailed. That said why do you think an eviction will be costly and long? If they refuse entry then you have grounds to terminate. If they allow entry and the damage is excessive you have grounds to terminate. Ideally I would simply be looking for the grounds to terminate, and tell them they can go peaceably and there won't be an issue, or they can refuse and they will be evicted. A broken unrepaired window is a health and safety violation and the City will issue a code enforcement action against you for it if it is not repaired. Make that repair as important as it needs to be to avoid issues with the City. No matter how bad the damage is now it can get worse as pet urine is allowed to seep deeper into walls and flooring etc. 

You bring up some good points. Upon reflection I can see where my current PM could have done a better job handling the change over. This particular PM is new to me. I didn't have a PM in this market so I had to hire a new company. I checked out several, interviewed two and hired this one. The person I interviewed is not handling my property. It was handed off to a junior person at the brokerage who is not experienced. I've had to micro manage her from day 1. We knew the tenant had pets from the due diligence inspection. It had taken over 4 months to get the tenants signed to new leases. This particular manager is not very diligent on follow up and has a tendency to believe tenants lame excuses. This tenant has not allowed inside inspections. I was the one to discover the broken window. We just did an eviction next door. I was on site to inspect evicted unit. You couldn't miss the broken window as you had to walk by it to get to the evicted unit. I'm sure the manager has never set foot on site. A week later I got the maintenance guy to come with a pass key. That is when we discovered the smell. 

The game plan now is to perform a "safety" inspection of all the units. Checking small smoke detectors, fire extinguishers and etc. That will get us access to the units per the lease. We have it set up for next Friday. We will see how that goes. 

I recently purchased a 10 unit complex and have a dilemma with old tenants.  I have at least three current tenants with pets not on the lease. Previous PM was out of town and was not diligent about watching the property. We have gone through and updated to our leases to with pet addendums reflecting they have pets.  Recently while doing a external site inspection we discovered one of the units is in really bad shape.  There is a broken window and the smell of pet urine and feces is overpowering.  The tenant has been refusing access to repair the window, no doubt to hide the pet problem.  Judging by the smell and what I can see through the front window the place is a total wreck, looking at over $5000 in new flooring and repairs.

My dilemma is the damage has been done, what should we do going forward?  They are signed up to new lease and paying on time the past 4 months.  Do we evict or do we let them run out the lease and non-renew at the end of lease?  If we go the eviction route we will get them out earlier however there is the added court costs etc.  If we let them run out the lease it will be less confrontational. Either way the damage has been done so the repair costs will be the same. Damage deposit doesn't come anywhere close to paying damages.  Tenants are not likely to pay should we get a court judgment.  

Forney has become a suburb of Dallas. As prices have run up in Dallas many people are having to look further out. My daughter recently purchased new construction in Forney. They were pleased what house they could get for their money, good schools and more space. They are both hi-tech workers in Dallas and are able to work from home a couple days a week. The hour commute is manageable. 

Quote from @Cody L.:

Quote from @Shyam Kumar:

I have been thinking about relocating either in California or Texas. I want make this decision based on which state and city is better suited for real estate investments. I want live in a city where I can expand my real estate investments and make good returns.

Any guidance on this will be very helpful.

 As someone who lives in Ca, and should be biased towards investing in CA, I'd take Houston all day long.

Let's set aside the fact the returns are better (and honestly I think there is more upside -- depending on what you buy):  I'd be scared to death of the politics of CA.  Rent control.  Eviction moratoriums.  tenant friendly property codes.  etc.   "CA gets a 'no' from me dawg"

Have you lived through a Houston Hurricane yet?  Wait until you need to muck out a place and rebuild after a hurricane. I will never invest near the gulf coast again. I learned my lessons in TS Claudette and H Rita. I know people who lost everything in Rita. 

Quote from @Shyam Kumar:

Quote from @Pete Harper:

Quote from @Shyam Kumar:

@Wale Lawal @Joe Funari @John Morgan
My biggest concern investing in Texas are the high property tax and insurance rates. I fear this will affect cash flow and net profits.

Any thoughts on this?

I've owned property in both California and Texas. You are correct Texas property taxes are sky high. On my primary residence I pay double the taxes in Texas on a $800k home compared to a $1.3M home in California. On average the total middle class tax burden is higher in Texas compared to California. 

Insurance is half again higher in Texas too. The primary drivers are weather. Between hurricanes and hail damage claims are much higher in Texas.  In the 20yr life of a roof you can pretty much guarantee a hail storm requiring replacement. We had to replace the roof on our Texas primary residence. Just about half the rental properties we buy need a new roof. 

 @Pete Harper Where do you prefer to invest in rental properties, California or Texas?

I invest where I live. My rule is I only invest within a 2hr drive. I want to be able to keep an eye on my properties. We also do most of our own renovations. 
California and Texas are two different markets. California was much better for appreciation. We almost 4X our investment in South Bay in seven years. I've made much much more money in CA than 20+ years in Texas. TX has made a strong run in the last two years but things are cooling off fast.
From an Investor standpoint CA was a great market. I developed two building lots. Sure there is a ton of red tape and delays. That only serves to increase the value once you are done. Limited supply, high barrier to entry, high demand equals high prices. 

Quote from @Shyam Kumar:

@Wale Lawal @Joe Funari @John Morgan
My biggest concern investing in Texas are the high property tax and insurance rates. I fear this will affect cash flow and net profits.

Any thoughts on this?

I've owned property in both California and Texas. You are correct Texas property taxes are sky high. On my primary residence I pay double the taxes in Texas on a $800k home compared to a $1.3M home in California. On average the total middle class tax burden is higher in Texas compared to California. 

Insurance is half again higher in Texas too. The primary drivers are weather. Between hurricanes and hail damage claims are much higher in Texas.  In the 20yr life of a roof you can pretty much guarantee a hail storm requiring replacement. We had to replace the roof on our Texas primary residence. Just about half the rental properties we buy need a new roof. 

Be prepared to screen through a whole lot of junk. Before bidding I would do a drive by inspection. You would be amazed how many homes have been torn down leaving a vacant lot. Next you will find many more that are in total disrepair; roofs falling in, broken windows, water damaged, fire damage etc.  I started screening on Zillow or Google Streetview to save driving around. I'd go from a list of 20-30 properties on the auction list down to 2-3. The better properties always come off the list at the 11th hour. I asked the sheriff and was told they made a small payment. You'll frequently see the same property in the next auction only to repeat the process. 

This was a whole lot of work for little return so I decided to send letters like the original poster. Out of two auctions I received one response. Daughter of the couple who owned the home. She was wanting stuff out of the house. I drove by to inspect and found the roof over the kitchen caved in. Hard Pass. 

In the larger markets you will find professional flippers. We found a nice property listed at $125,000. The owners had passed away. ARV was $250,000. Bidding started with me and two flippers. They blasted through $150,000 in a couple bids. Too rich for me. I ended up going for low retail. One major plumbing or AC problem with the home and these guys were under water. Risky business.

Quote from @Bruce Lynn:

Just FYI....not to say there's not opportunity there, but Denton and Collin have virtually nothing that actually goes to sale.  Some, but very very few.....might be better counties to attack like Dallas county.   I guess when you think about these two counties....lots of new or newer construction....most of that will have loans on it, loans typically make owner escrow taxes and either way the taxes end up getting paid from escrow or lender pays it, even it owner doesnt.   Most of what goes to tax sale is older homes or lots that have been paid off long ago and for some reason owner can't or family stops paying taxes....so that's what is left....but not that many of those in these counties.

 Adding to your comments. I've followed Anderson, Freestone and Bell county auctions. The majority of the properties that hit the auction are real junk. Abandoned houses with roofs falling in. Frequently the owner has passed away and nobody takes care of the place. They sit 2-3 years before hitting the auction. 

The pattern I see with the better properties is they will be withdrawn the night before the auction. The owner will come up with a couple hundred bucks and get the property pulled off the list on the 11th hour. The same property will be back on the next auction list next month. I've seen the same property hit three consecutive auctions and never sale. 

Killeen is a strange market. I would not recommend investing there without first looking at the area. The old down town is pretty rough, a block or two makes big difference. I highly recommend you visit and drive around a bit to get familiar with the area. Also talk to PMs to see if they will manage property in that area. Better areas are South of I14 and East Killeen/Harker Heights  Killeen is a one company town with Ft Hood being the dominant employer. Currently War is Bullish but that may change.

We own a 4-plex and have done well. In the last couple years prices have shot up. A lot of CA investors bidding prices up  :-)  BTW I'm a retired Engineer from the bay area.