All Forum Posts by: Sam Epstein

@Andrew Johnson I agree not to put to much stock into. What Zillow says. That is why I also looked up recent deeds of trust, to see what people are actually paying. I know of at least 2 properties of similar size that went for over $250k, but they were in pristine condition. Most appear to go from $150k to $200k. I looked up pics of the sold properties. That is why I think this property could probably sell for around $179k even though Zillow has it at $139k. Zillow valuation I think is lower because the house hasn't been fixed up and is probably fairly high for fixer up condition but at least $20k low for ARV. My main concern is still the IRS issue. I would hope it would scare off other bidders, but want to do my homework first, since the owner has $200k- $300k in IRS liens, which aren't specifically on this property, so I hope other bidders find them by doing a name search. The trustee handeling the sale for the bank most likely sent proper notice to the IRS, but I have no idea how to verify that they did. Lawyers and banks do screw up sometimes.

@Jay Hinrichs I am aware of the 120 day right of redemption, and don't mind waiting, since I won't be using borrowed money. My concern is primarily with IRS 14497. My understanding is that the bank must send proper notification 25 days prior to the sale, or else IRS liens won't be discharged. It is not clear to me what would happen in that scenario. I tried to call the IRS but they gave me a phone number to their advisory number that goes straight to voicemail. I tried calling the law firm that the trustee is at, but got some random person who said they couldn't tell me anything. Here is the link to what the IRS says about failure to notify them of a non judicial sale (which is how foreclosures are handled here in Texas). https://www.reginfo.gov/public/do/DownloadDocument?objectID=50925301

@Nancy Bachety I love looking at public records, but what I have found so far is directly from the IRS website and applicable statutes that they cite. I do not believe the public notice of foreclosure is sufficient notification. The public notice is how I know about the sale. But realistically if you have a financial interest in a property you would expect actual notice mailed directly to you. The IRS requires this (I believe), since they can't be expected to monitor all foreclosure notices and comb them. I'm going to try to contact the bank since I hit a brick wall with the IRS so far. 

Since the house is an older home my worst case rehab is around $30k - 40k in repairs. If repairs aren't worst case it could be around $20k. I'm hoping I can pick up the house around $90k and then I have plenty of room, but if it goes to $110k or above I am less sure of the deal. $110k plus $40k would be $150k on a house worth $180k, minus realtors and closing costs.  

@Nancy Bachety I understand the 120 day right of redemption that the IRS has.  The part I am less clear on is what I've read about the IRS requiring proper notice prior to auction. I think I read that if they are not properly notified by the bank (25 days before if I remember correctly), then the lien will not be discharged from the property. How do I verify that the bank notified the IRS? If they don't and I hypothetically purchase the property anyway, is there a way to fix the situation? Undo the sale, redo foreclosure, or am I then stuck with a worthless property? I tried calling the IRS this morning, but so far it seems like a beurocratic nightmare to figure out how I can verify that they have been properly notified. 

Also, how do you estimate repairs on a house you haven't seen on the inside?

I have a property I am interested in bidding at auction and need help figuring out a max bid. this will be my first auction purchase. I have some experience working for my dad as he has around 30-40 cheap rentals, but he hasn't made a purchase since 2009. Markets change, and what was accurate in 2009 isn't today. I researched the deeds of trust and know the guy losing the property paid $99k in 2004. Zillow says it is worth $139k, tax rolls have it at $103k. From looking up deads of trust in the area borrowed amounts all over the map in last couple years, anywhere from $125k to $260k for similarly sized houses (obviously quality may be different). My best guess would be to that this house could sell around $179k in good condition. What would be a good way to determine a max bid for this potential flip? It is a  1500 sq ft 3/1 that will need central A/C added and possibly convert some space to make it a 3/2 in order to get a good retail price. House looks straight from the outside, but no idea anything else on the inside obviously.

I tried approaching the owner to purchase the house pre trustee sale as this is not his homestead, but he didn't even open his door (told me not interested through the door) and was completely closed to even speaking to me about the house. 

Also I know the owner has like $200k in IRS liens...what kind of research do I need to do about that, or does that disqualify the property.

I would analyze the deal the same as if you were going to rent out both sides, but figure how much you would have to pay in rent for your side. For example if you will live in a side that is a 2 bed 1 bath and you would have to pay $850 a month in rent to someone else, assume that as your income for your side. Then if the other side is also a 2 bed 1 bath that you rent for $850, your total would be $1700. Then if you do an all bills paid situation you need to account for that, although some duplexes pay their own bills separate. I assume you currently have to pay rent somewhere else or a mortgage, so here you will be your own tenant. The plus side is you know you will pay 12 months out of the year and not cause a huge amount of damage. You also don't have to report your own rent factor as income rob the IRS, but if you rented out you're side and cash flowed you would pay income tax, and still have to pay rent somewhere else that isn't tax deductible. Remember actual tenants might not pay12 months out of the year since you might have vacancy when the year move in/out and also you've could rent to people who lose jobs etc.

Disclaimer: I am not an accountant or lawyer, so none of my comments about tax consequences etc should be taken without consulting a qualified professional!