All Forum Posts by: Ronald Allen Barney

Foreclosures is a specialty area of investing.  It can be lucrative but there is skill involved.  The key to it all is a good professional title search and as much of a head start on due diligence as the institution foreclosing will allow.  One thing that makes it tricky is that people who like to not pay their taxes or mortgage will tend not to pay other things as well, which will spawn liens.  If you buy a foreclosure property and miss a lien on your title search, guess what.  You get to pay the lien.  In the case of some liens, their claim to the title becomes stronger than yours in the foreclosure process so you might lose everything.

But the biggest reason buyer agents steer clients away from foreclosures is that foreclosures don't offer any buyer agent commission. It's less work for that agent because foreclosures come from a short list, but any work they do is free. What I say to clients is to advise them of the tricks and pitfalls in the foreclosure space and tell them if they go that route they won't really need me anyway. Give me a shout when you want to go back to shopping the MLS market or see if I scored any off-market sellers.

I do plan to get a live human CPA when I spawn out several LLCs and get income close to $20k/year (quarterly filings).

There are online services that will help you set up an LLC, typical set of fees runs about $400 if I remember right. When I did mine via incFile that came with a referral to Bank of America for business bank accounts, and BoA walked me through that setup, pretty painless.

For tax deductible transactions the software has each deductible category so any given transaction it either automatically knows based on the vendor and/or description, or it will ask you to set a rule.  In my second month using the software and there are fewer transactions that I have to set rules for.  I think in a few more months all of them will automatically get categorized.  Tax time, export out of the accounting software, import to tax software, and then taxes become as easy as filing a personal return.  The reason I picked Xero (to use with HR Block) is because I saw all the horror stories on the Quickbooks support page for how Turbotax (the company that owns QB) won't import from the QB export file (has to go through a conversion step).

For CPA I know whom not to go with:  Mazuma.  $90/month and they made me do most of the bookkeeping work (export out of the bank and import into their portal, even though their Zipbooks portal connects directly to the bank).  They finished my taxes just about a week go.

Right now I'm on Xero for $11/month and the only real work is about 5 minutes a month for transactions the software doesn't know how to categorize.  $79/month savings and less work.  2021 taxes will be done on time next year.

Well that's obviously not TK.

If you had an inspection contingency you can back out and get your binder payment back.  If you boldly went under contract without an inspection contingency you will lose your binder payment.  Either way show the inspection back to the seller with estimated dollar amounts for repairs and see if they're motivated enough to repair or adjust price accordingly.  If they won't compare what you'd lose backing out versus what you'd gain failing forward and finding a contractor for the surprise rehab.

Cinderblock can be a bit of a challenge to insulate.  If you're buying cinderblock check the heating and cooling costs.

Here in Northern Florida what we've seen is that earlier this year a lot of owner-occupiers snatched up properties at bid-up prices, got all excited to be going into their dream home, and then the bank sent the appraisers out and the appraisals came back at significantly less than the price the house got bid up to, and they didn't have the cash to make up the difference.  So the volatility churn has been, inventory and demand have reset somewhat, with sellers trimming down their asking prices to put them within some achievable range of what they got appraised at, and buyers formerly under contract going back into the market with a more modest expectation of what they should be able to borrow with what cash they are able to put down.  The price "cooling" that some people talk about are not a correction of supply and demand, but enforced down from the banks on high.

Some exceptions are mostly from the New York Metro area where they're as flush with cash as ever and still giving no "effs" for what the bank says as they have plenty of cash to make up the appraisal gaps.  Possibly in a few years the familiar southern twang of the Jacksonville accent will switch to New Yorkerish.

@Bruce Woodruff this is an investors' forum.  We should be familiar with the concept of return on investment, and not agonize over cost in a vacuum.  Yes there is the minimum 4 years work experience and 1 year supervisory experience, and the prep course for the test is about $1k and it's supposed to be a difficult test.

The difficulty of the business to operate is probably why a good GC is extremely hard to find.  If supply and demand can't correct the difficulty with price, then some sort of regulatory force is acting on the industry that needs to be removed, because we are all screaming for more GCs from sea to shining sea.

Well if you won't consider cash out refi or HELOC your other option is to accumulate more cash.

I'm not in the Bay Area but it wouldn't make sense to me that they would target only MFH for rent control and not include SFH. I think that would be a wash.

The latest round of eviction moratorium has been a political weapon targeting only those areas that weren't as obedient on the Covid Commandments down from On High, which I think in the Bay Area every time Fauci reads tea leaves that instantly becomes public policy.  That should mean at least not having to be blocked from evicting bad tenants.

Specifically with house hacking the two biggest challenges tend to be finding one (as they are highly in demand these days as a lifestyle fad), and the second challenge being funding one when you find it.  It sounds like you have a cash position that makes the second challenge not a problem, so if you do manage to find one I'd say vet it with investor math and then if it passes (no as a measure of how much it reduces the mortgage but the cash on cash return if you were to rent out the whole building, pretending you are just another renter in the math), I'd say jump on it.