All Forum Posts by: Sam Epstein

@Jay Raught where do you go about finding notes? How do you price the notes, especially NPN? I have been looking into getting into real estate investing, and have some savings available, but have noticed buying houses directly is more competitive than I would like in my neck of the woods.

@Mark Creason I couldn't agree more. Trump has made so many contradictory statements that it is impossible to know what he will do, or the ramifications of all Of his drastic policy proposals. Infrastructure spending, lowering taxes on wealthy, ending free trade. Will there be inflation with higher interest rates, some market crash like we had in 08, some combination stagflation situation (highly likely). I can't understand how politicians can be for both lowering taxes, raising spending, and adding tariffs. Inflation is a horrible tax on wealth offering much greater wealth destruction than income tax, tariffs are also a tax. All the Trump voters will be crying when tshirts at Walmart go from $10 to $20 in a few years if they are forced to do all manufacturing in the United States. Surely some good may come from some aspects, but I am not counting on the good to outweigh the bad.

I showed up with a list of about 10 properties today, including this one, and left without buying anything. Several (including this one) I was able to verify got pulled, several went to high, and several I have no idea if they were pulled or if I just missed them, since it is very disorganized at the foreclosure auction. 

@Michael Hayworth @Jay Hinrichs any rules of thumb for what you pay at auction. I get that you can't really break out expenses since you can't see inside, but what kind of rules of thumb do you go by, or are possible to achieve when buying from foreclosure sales? 50% arv on older homes needing more renovations, maybe 60% on cleaner looking/newer house? Jay, I don't see how paying retail outside foreclosure sale is a low risk strategy, since the market is fairly tight where I live at the moment. I am very familiar with car auctions and have bought well over 1000 used vehicles that way, and bid on thousands. Those auctions are very different in that there is way more volume and if I want to buy 5 trucks at wholesale prices under $10k next week it can be easily accomplished since there will probably be at least a couple thousand vehicles sold at dealer auctions in San Antonio in a week's time. For the entire month there may only be 500-1000 houses on the foreclosure list in Bexar county with 1/2 getting canceled and 1/2+ of remaining  reverting to the lender, with less than 1/4 left for investors. Are there any deals being found by you guys currently?  I had some unexpected health problems otherwise I'd still be in the car business. Just trying to learn something new, any advice is much appreciated.

@Michael Hayworth Thanks for the advise. Yeah, I realize all of the things you said are accurate, I guess I can get stuck overthinking. In general though, how do you decide on your make bid, since the auction can be very competitive as you say? I guess I realize there is a high probability I won't get this house, but going over specifics as an example.

@Jay Hinrichs how should I decide how much to bid? It's hard for me to wrap my head around estimating hypothetical repairs. In order for this house to sell for $179k it will need to be nice. The house is older, so there are so many things that could be wrong.

What I have so far for hypothetical repairs so far is:

$7k install HVAC

$6k add a second bathroom out of existing space.

$5k Refinish/repair hardwood floors.

$2k interior paint

$2k exterior paint/minor siding repairs

$5k remodel kitchen

$2k appliances with installation

$3k plumbing repairs/replace old pipes as needed

$2k electrical work/updates box

$1k fix windows as needed

$8k termite remediation and repairs for damage.

$1k landscaping

Total possible: $44k

I don't know if it would be possible to buy the house if I assume this worst case scenario, so how do you decide on how much to budget for repairs, especially on an older home. The neighborhood is going through some gentrification, which is why I am interested in this older home/ think the amount owed/acceptable to the bank could be within range. If I go with my worst case repairs and use 70% rule I can only bid around $81k, which I don't know if that would have a realistic shot of being top bidder. 

@Jay Hinrichs I just spoke to an attorney that runs a title company here. He told me that as a matter of course trustees for banks will notify the IRS of the sale. If they do then you are right about their right of redemption falling off after 120 days. He did tell me that although he had never seen a case where the bank didn't inform the IRS of the foreclosure sale, that if they don't then there would be a problem getting a title policy. He said typically in cases with IRS liens the bank will provide an affidavit that they sent notice to the IRS to the purchaser, and that this is sufficient for a title policy. He said if they don't inform the IRS then it could be a real problem. Since this particular lawyer took a couple days to call me back (and I wasn't sure if he was going to), I had already called a different lawyer to send a strong letter to the trustee asking them to verify IRS notification, since they wouldn't tell me anything over the phone. The title company lawyer said that is pobably what he would have advised also, since they wouldn't speak to me directly.

@Brent Coombs yeah I'm not sure what the procedure is if someone buys a property with an IRS lien at a trustee sale and the IRS wasn't given proper notification. The explanation I found on their website wasn't clear to me. I think in order to discharge the lien you would then have to submit an appraisal and another document like the tax appraisal and ask them to discharge their interest by offering to pay some portion of equity they might have (or possibly all equity). I think (though not sure), their interest would be reduced by whatever the auction purchaser paid at auction. 

My best guess on how this would work would go as follows: I buy a house for $100k that is worth $140k. I then have to get the property appraiser, and assuming the appraiser says the property is worth that $140k, the only way I could be sure of discharging their lien would be to offer $40k or try to negotiate for less with no guaranties. I am not at all sure they would even consider the purchase price paid to the bank or money spent on improvements (good questions for a lawyer). Either way that situation pretty much defeats the point of buying at auction, might as well just keep the $100k in the bank and save the stress if they will just take my profit. Also, many regulations are poorly written and not fair. You should look into why've people stopped doing contracts for deeds (the penalties for errors were steep), just my .02

@Nancy Bachety yes,IRS liens say specifically on them that they attach to all of the person's property. I'm not sure if these liens are more likely to be missed by other bidders, or the lawyers handeling the foreclosure (who  are supposed to notify the IRS of the trustee sale). I only found the lien because I searched the owner's name and saw the IRS liens (they show the owner's homestead), which is different then this property. I went back and checked signatures on both properties deeds of trust and saw that they matched since it could have been a different person with the same name.

My next step is to call a lawyer that I know is knowledgeable about title issues. I just don't want to run up a legal bill of a couple thousand having him try to pry the notification information from the IRS or the bank, since 

@Nancy Bachety yes,IRS liens say specifically on them that they attach to all of the person's property. I'm not sure if these liens are more likely to be missed by other bidders, or the lawyers handeling the foreclosure (who  are supposed to notify the IRS of the trustee sale). I only found the lien because I searched the owner's name and saw the IRS liens (they show the owner's homestead), which is different then this property. I went back and checked signatures on both properties deeds of trust and saw that they matched since it could have been a different person with the same name.

My next step is to call a lawyer that I know is knowledgeable about title issues. I just don't want to run up a legal bill of a couple thousand having him try to pry the notification information from the IRS or the bank, since I might get outbid anyway.