All Forum Posts by: Ronald Stanley

@Ronald Stanley  First of all, each state and area handles the sales differently, so what works in one area might not be best for others.  I am in Southwest Ohio and attend/buy in the Cincinnati area tax foreclosure sales.  I normally do as much due diligence that I can do in the office a week or so prior to the sale.  Once I narrow down the properties I'm interested in bidding on, I physically view the properties a couple days before the sale.  The reason I wait so long is that many times properties are withdrawn from the sale a few days before.  Sometimes, I will even look to see if a tax payment has been made which usually indicates that a payment plan has been initiated and will be withdrawn.  It's disheartening  to do a lot of due diligence and go to the sale to have it withdrawn.  

Right now, in my area investors are paying crazy amounts for foreclosures sales.  For the previous 8 years, I haven't missed a Tax Foreclosure sale in Cincinnati.  The past 8-10 months, I've gone to maybe 30% of the sales because people are buying at such high margins.  I'd rather wait until the craziness subsides than to do all the work at low profit margins.

@Ronald Stanley
       "It seems like you and your partner together look at two homes a day on the average"

Actually I had a typo above (which I have corrected).  We don't look at 700 a year it is 7,000 a year.  We also do that in the two months before tax sale. It is more like 100+ per day between the two of us. That is extreme, I doubt anyone else in my area does that much. They may evaluate that many but not drive by that many.

Regarding your question to John, Now I simply look or evaluate, at as many as I can. The goal is to get properties at less than the "as is" value. If it is not something I want, I just wholesale it to other investors.

In the past I would sort the list by; the streets in the areas I knew well, the assessed value, the lien amount, the lien to assessed ratio, whether it was vacant or not and whether it was homeowner or not.  This sorting might be by a single variable or multiple variables. I would then scroll through the list looking for opportunities. Since the beginning, I simply wanted a great deal, not necessarily a property I would want to own. If it was a great deal, I knew I could make money on it one way or another. 

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Thanks Ned. This is great advice

 I start 30 to 60 days before the auction. I update my spreadsheet, look at everything online and eliminate stuff I'm not interested in.

Then I drive by about 1000 properties to evaluate them in person. I rank them and put down a max bid.

To invest 25k I would look at good buildable lots and land and maybe a few low ARV house or Mobile homes with land.

There is less competition in smaller counties and therefore better prices.

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Thanks John. 

@Ronald Stanley   You can also go to the regular foreclosure sales.  Those might be quicker to flip, as you can normally get title insurance right away for the next buyer, unless GA has some kind of redemption period for regular foreclosures.  Title company is the best place to check...and I would say check with 2-3 just to make sure.  Should be the same at all title companies, but some are more knowledgeable than others.   Also if you have investor friendly title company you use, check there as well as they may be more familiar with the process, costs, ins and outs.   For example we have some redemption periods in Texas only 6 months, but still normally takes 2 years or a lot of money to get title insurance.

Just as many of the other tax sale experts that have answered here, when I am out looking at tax sale properties, I am also driving for dollars.  You might checkout some software Deal Machine that can assist you with that.  I may find just as many off market properties to go after as I do tax sale properties.  So many alternatives to just doing tax sales.

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Thanks Bruce. I don't believe there is a redemption period for foreclosures in GA. I also just added Deal Machine to favorites. 

@Ronald Stanley

I just started doing this about 5 months ago in Ohio, so the state is different. Our tax sales are very random and are not all at once. Many get pulled at the last minute so I wait until a week before to do my research. I also check the docket for each the day before the auction because several get paid the day before. I drive the property a few days before and get out and talk to the neighbors. Yep I knock on doors and say hay I'm looking to buy the house next to you. I don't say it is at auction but many already know and don't care. You can get some great info from them about the property. Like one had a fire in the kitchen and another had all the copper ripped out. Hope that helps.

Cheers

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Thanks Steve. Great advice. No one knows more about a property then a nosy neighbor :) I will definitely take your advice on this. 

Back in the day in the country our family was active in we might own 300 to 500 parcels at anyone time.. And it was SOP to pay the taxs when we sold them since the annual tax payment was so low it cost more to book keep it then to just pay the penatly at sale. so we routinly had 100 plus on the tax sale every year with many investors rubbing there palms together to grab the Hinrichs inventory.. only to have my Dad redeem them the night before or the morning of when we came to the auction ready to buy the 100 plus parcels we bought a year  big time games right. ?

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Thanks for your imput Jay. It sounds like you Dad was a smart business man. 

Yes to #1 in a way......I start as soon as I get the list doing my basic research...picking the good ones from the bad ones.  In Texas this is typically about 30 days out.   Of course the driving for dollars part is better the closer you get to the auction so you are not driving to ones that are getting pulled or paid.....but due to time constraints for me...I normally try to start driving early...so I'm not in crazy rush mode at the end.  That does mean though some end up being a waste of time.   I am on the lookout for other properties though while I am driving and try to combine tasks.

Land doesn't cash flow normally...or has negative cash flow....so don't buy land thinking the cash flow will allow you to quit work.  Any redemption period in GA?   How long do you have to hold before you can sell?   Normally it is at least 2 years to get title insurance.  Without title insurance your market for resale is slim.   I say keep the day job to help fund your real estate habit.   Tax sales can be very hit and miss.  Sometimes you win a lot and sometimes it can be 2-3-4-6 months before you find the next right deal.  For me it is bonus extra income, not a consistent predictable source of cash flow.

Hey Bruce, thanks for your reply. Yes, GA has a 1 year redemption period. I just learned that this is a hybrid state so supposedly there may be a few counties with shorter redemption periods. I'm not too sure about that. I am being told that after you bar the right to redeem after a year and 45 days and complete the quiet title suit, you should be able to sell. I was not aware it may take 2 years for a buyer to get title insurance. I may be able to check with one of my title companies to verify that in my state. Yes, I plan on keeping my W2 job until the income from real estate investing is sizable enough to transition into it full time. I'm noticing that as I am learning more about tax sales and the auction process, foreclosure auctions are very similar. Is this a sister real estate investing option to tax sale investing?  Since tax sales may not be enough to create a full time income, I am wondering if there is another strategy you use along side of tax sale investing to create additional income.  

 I start 30 to 60 days before the auction. I update my spreadsheet, look at everything online and eliminate stuff I'm not interested in.

Then I drive by about 1000 properties to evaluate them in person. I rank them and put down a max bid.

To invest 25k I would look at good buildable lots and land and maybe a few low ARV house or Mobile homes with land.

There is less competition in smaller counties and therefore better prices.

@Ronald Stanley

1) I start my research as soon as possible.
 Here are some important considerations. There were 22,000 liens on the Baltimore city list when it came out.  (I am bidding on Tax Liens ant a one time annual sale)  By the time of the sale it will be down to 8-12,000. This means a significant number of what I look at will eventually get removed. So If you only have a modest amount to invest and are only going to research a small number of liens it is best to wait.

In my case I need to start as early as possible because I want to bid on everything we can. In order to evaluate enough properties,I need to start right away, even though I know many I look at early on will be removed.

My partner and I look at 7-900 properties a year. That winds up being about 2500~ bids and we win anywhere from 200-1,000. The number we win has been dropping due to the competition increasing the last few years.  Now looking at that many properties can be done in Baltimore because of the densely distributed distressed housing. There can be as many as 5-10 row houses in the sale on 1 block.

Because of the age of the housing stock and the risk of properties being in very bad condition we, physically drive by 90+% of what we bid on. If you are bidding on land that probably is not important.

2) Strategy? I don't know your area. I would think bid on as many as you can. If that means multiple auctions, so be it.  Land can work if you get it cheap enough. A common strategy is to sell land with owner financing. It makes it easy for people to buy and afford and there is the cash flow you wanted.

@John Underwood want to comment?

@Ronald Stanley  First of all, each state and area handles the sales differently, so what works in one area might not be best for others.  I am in Southwest Ohio and attend/buy in the Cincinnati area tax foreclosure sales.  I normally do as much due diligence that I can do in the office a week or so prior to the sale.  Once I narrow down the properties I'm interested in bidding on, I physically view the properties a couple days before the sale.  The reason I wait so long is that many times properties are withdrawn from the sale a few days before.  Sometimes, I will even look to see if a tax payment has been made which usually indicates that a payment plan has been initiated and will be withdrawn.  It's disheartening  to do a lot of due diligence and go to the sale to have it withdrawn.  

Right now, in my area investors are paying crazy amounts for foreclosures sales.  For the previous 8 years, I haven't missed a Tax Foreclosure sale in Cincinnati.  The past 8-10 months, I've gone to maybe 30% of the sales because people are buying at such high margins.  I'd rather wait until the craziness subsides than to do all the work at low profit margins.