All Forum Posts by: P.J. Hankins

Great info guys. I appreciate the support. I worked some angles today, hopefully I have a success story to share regardless what happens with this deal.

Joshua Dorkin - Best tag line ever at the end of a pod cast!

"...please do not take offense if you are a 90 year old naked woman, shoeless or have missing teeth, you're still welcome on biggerpockets.com."

For the most part I'm venting here, but I'd love to know how many of you who are years into this and running a successful REI business for your selves, A) at the beginning felt like throwing your hands into the air, and B) what you did to keep your self from getting broken down by the difficulties starting out.

To give a little context here...I have been feeling really great about the progress I've made of the last 6 months. I have one flip under my belt, two rentals that are doing OK, one tenant just renewed for another year, and I was set to close on a new property *tomorrow*. I've actually had responses to "yellow letters" and have some leads I'm working there. Things are going well, I think.

I found out yesterday, though, that the property we were getting ready to close on had been split into two parcels, and Fannie Mae only foreclosed on the parcel with the house on it, .52 acres. The back parcel, another .33 acres, was never secured by the mortgage and is still in the previous owners name. The location of this property, being what it is, would only make sense to have the back parcel with the house, so, now my choices are to either back off the deal and loose about $600 or keep with it and see if the previous owner will settle for a little sum of money for the back parcel. I suppose neither could happen and I'd be stuck trying to sell a renovated house with an odd lot behind it, which can only be accessed by the lot that that the house sits on. I can't think of any buyer who would want that.

I know what I *should* do here, I'm just really frustrated. Perhaps at myself for not catching this. I've looked over the counties GIS mapping for this property a thousand times and even knew the property was seemingly split into two parcels. But it never even crossed my mind to *make sure* that both were in Fannie Mae's name and not the previous owner's

For some reason this has brought me way down emotionally to the point of asking myself if this is worth all the trouble. UGH!

I know it is, deep down I know this is my path out of the rat race and toward my financial goals. I love real estate, always have. My wife an I built 3 houses, in the days of easy loans and quick appreciation on homes. I love the search, wondering if this next house is going to be *the* one. I love the idea of one day sitting back after a lot of hard work and living off of the passive income I've built up.

It just seems that at the beginning getting the pump primed is tough. Maybe this is one of the intangible things that have been holding me back...i hate hate hate disappointment, maybe I need to work on shrugging off a little quick and just moving along.

Any hoo...i'd love to hear some war stories from ya'll if you feel like sharing.

I agree with Troy Fisher. More cash flow is always better.

Will the property be managed by you or a property management company.

I've owned two rentals now for almost 5 years. One thing I can tell you is that I wish I had purchased at a price point that allowed for property management. I want to be an investor, not a land lord. I understand that I had to start somewhere, and the positive side is that I've learned and am using what I learned to buy the next investment.

Some times the little cash flow compared to the inconveniences of land lording can have you feeling like its not worth it. I've had to tell myself, at those times, that the tenants are paying my investments off and that kind of helps me keep on keeping on with these properties.

As we are shopping for our next investment we now build in management costs,that way we can be at arms length.

I'd be interested in hearing feed back on this, but an added benefit, for me at least, that I'm finding when I force myself to build these costs in, the quality of investment seems to improve, and with that I feel it sets me up for a bigger success.

PJ

This was a great thread! Fantastic support here for Tyler.

NICE!

Ali Samana - I've not read in detail all the replies here so forgive me if I rehash something.

The biggest question to you is WHY do you want to invest in PM?

There are more or less two basic reasons - 1) To cash in on volatility of silver or gold and 2) A hedge against inflation\preservation of wealth.

If you are looking for quick gains and are slanted towards stock trading then paper silver or gold is the way to do it. There are problems with this IMO. First off, to make any significant gains you have to be able to purchase A LOT of shares....A LOT. Secondly, I believe the paper market (i know I'll probably get pounced on here) is heavily manipulated by MASSIVE players who are trying to keep the PM prices down in order to gain on constant short positions, and also to keep the dollar looking stable. This actually IMO creates a market that is unstable and hard to understand from a technical perspective. Thirdly, investing in the paper market only means you are investing in promises to deliver. At some point because of number 2, the paper market is going to implode and the small players will be left holding the bag and not the metal.

If you want to hedge against inflation\preserve wealth - Then IMO purchasing physical bullion or junk 90% silver coinage is the way to go. This is problematic in ways as well. While you don't deal with the risks of the paper market, except for the price fluctuation, you do need to keep abreast of what's driving the price in order to be ready to exit PM in order to move your wealth into the next asset\commodity bull market\ bubble. Physical storage can be an issue, but I believe this to be a minor issue. I believe the biggest issues around storage is keeping it close, safe, and inconspicuous. Also you have to consider the liquidity of what you purchase. Paper money *is* liquid, precious metal is less liquid than paper money. So you have to constantly plan and be ready for liquidation if you need to access the wealth you've stored in precious metal. Dealers like Apmex (I personally use goldsivler.com) usually have a buy back schedule for their customers. This allows you to have some ease and convenience in the plan to liquidate, but you have to remember ease and convenience come with a price.

Which physical PM is better (gold vs silver) - There are some technicals to this, but to keep it simple the most important IMO are these: First off the Silver\Gold ratio. Right now it's hovering around 50:1. This means it takes about 50 ounces of silver to purchase an ounce of gold. This means silver has great up side potential as far as performance as an asset goes. In the early 80's, when the last PM bubble popped, the ratio hit 100:1. Secondly, industry has found more and more uses for silver. Its used in everything from toothpaste, to solar panels, to cell phones, to antibacterial products. There are literally infinite uses for silver. Gold on the other hand has no real use as a consumable in industry, so most gold that is mined get's purchased and then sits in vaults. This has lead to silver being in more demand with dwindling supplies. Related to this is that silver is price in-elastic, meaning industrial use hasn't s shown any signs of decreasing demand while price has gone up, in fact demand has increased. Lastly, to me silver is more affordable. If you make regular purchases of silver, (buying on a dollar-cost averaging basis, you can, over time, build up a nice savings that will preserve wealth far better than a savings account at a bank.

All this doesn't even cover the biggest reasons to invest in PM as a wealth preserver. The US monetary system went off the gold standard almost 45 years ago. The more money that is printed means that the price of gold an silver will continue to rise and the more likely a fiat currency will fail\collapse\reset. At some point, *EVERY* fiat currency has failed and gold and silver owners have been the winners in every currency collapse\reset. Remember the MASSIVE players in the paper market I mentioned above. Some of those players are governments including the US government and the Federal Reserve. I'm not preaching gloom and doom here, but our dollar has lost %95 of its purchasing power since 1913 (the creation of the current Fed Res system) and if you are a believer in history repeating itself, then at some point (i believe very near future) the dollar is going to have to at least go through some *reset* because of being decoupled from a gold standard and too much printing. I for one want my savings in tangible assets and not worthless paper.

The best book I've read on investing in precious metal has been Mike Maloney's Guide to investing in hasing power precious metals.

Hope this helps and sorry for being so wordy.

watching this myself for the responses.

@Pat L. - I know SDIRA's have arms length prohibited transactions as well, which lead me to believe I couldn't invest in my own projects. i.e. couldn't use the funds to purchase a house for rehab through my LLC.

Do you know if the 401K(solo)'s arms length prohibited transactions are the same as SDIRA arms length prohibited transacation?

Highly interested in this topic! Page Huyette - Thanks for asking it!

So I found an ad in my local craigslist "You pay taxes, you can have the house."

Long story short, the investor out of OR is telling me the property management company they were working with let the property go, didn't fill it and now the place is trashed and they "just can't do anything with it now" They don't want it any more so whomever wants to pay the taxes can have the property.

After doing my research from home today, i found out that it was sold at the tax sale in Oct of last year (2012) so it has a tax lien on it.

Its a 2 bed 1 bath, pretty small house at 700 SQ. The County has it assessed at $46K and zillow shows a zestimate of $37K.

Given all that, the total tax bill is just over $3100 bucks. Has anyone ever "rescued a house" which had a tax lien on it, paid the taxes on it to "buy" the house. What are the pit falls? Is it worth looking into? If so what steps should be taken.

Things I know need done are:

Quit claim deed to put property in my name. Can this be done before the tax lien is taken care of? I'll have to pay taxes off to redeem the property through the county. I'm sure I'll want to do a title search in there somewhere. I just don't know the order in which I need to take this.

Thanks for all the responses so far. Y'all have confirmed for me that I'm at least thinking in the right direction about it.

In the specific case that I'm in right now, I'm rehabing to sell, the house will be listed at just over 100K maybe just under for a quick sale. Given this price point and location (rural home) I'm considering just painting the doors to give them a cleaned up look and as Jennifer Lee and James Vermillion vermillion pointed out...uniformity.

James Gelske - interestingly I've never thought about that and that is a great idea. It wouldn't be the standard classical look of a six panel door, but i would for sure dress them up.

Rob K - you made my point with the cost being so low, that's why I struggle with it. Its one of those costs that isn't so bad it hurts, but is it necessary, I think part of my struggle is that I want to provide as nice a product as I can for the cost. I want to be our area's premier re-habber :)