All Forum Posts by: Scott Schultz

I have sold many site built, Modular and Manufactured homes in my career, the only category that has any trouble is Manufactured, as Site built amd modulare are both built to UDC and Local Code where a MFG home is built to HUD code. Many people even experienced service providers like lenders do not understand the difference, they often hear "Modular" and think Manufactured, you need to know the distinction and educate them. Modular is simply a stick built home, built in a controlled environment and delivered to the site in Modules and assembled, Manufactured homes are factory built to HUD code and the steel framing for the trailer is part of the floor system, they can be set on blocks and skirted, or set on a foundation with a basement. Today you can buy the same floor plan and features in either Manufactured or Modular construction from many companies, understanding the distinctions are critical. A few years back I purchased a foreclosure at Sheriff sale, everyone including the bank thought it was a Double Wide Manufactured, But they were wrong, and I knew it, a little paint, some landscaping and poured a driveway pad and I made $45K in 2 months purchase to closing. Here is a good article to help with distinctions. https://www.modulartoday.com/modularhomesvsmanufacturedhomes.html

@Boris Portnov In WI Junior liens do not technically need to be brought in to superior lien foreclosure, they often are, but technically dont need to be, and will still be wiped out. The public notice requirements satisfy the courts in WI as putting any interested party on notice to get in line for any surplus. 

Yes municipal and other tax liens will stay, certain kinds can be removed after the fact, like Federal Tax liens, IRS Liens, there is an application process for these. Municipal taxes and special assessments survive and become the responsibility of the buyer. 

some government type loans like USDA, VA, ect can have additional rights, for example USDA has 90 day right of rescission, so you can buy at sale, rehab the property, and USDA can decide they want to property within 90 days, they generally will make you whole, but you wont make money on your work.

Originally posted by @Zach Noegel:

@Ryan Seib thanks for the info! Would you happen to know if equitable interest has any affect on this? Since it wouldn’t be considered to be on someone else’s behalf?

No, if you real what Ryan posted (2).b the 3 in 5 or 5 in 10 year rule applies to owners, or interested parties. 

In my opinion this is not even close to a deal, unless you have a specific reason you want this property for long term strategic planning. curren rents put you well below the 1% rule, personally I wont do a deal below 1.5% plus 50% value upside after a rehab. If you are going to take the leap, you need to find a value add, and buy well below market. you need to decide if you want just cashflow, or want cashflow and appreciation. I want Cashflow and appreciation, my rule is to be able to finance 60% of ARV an get all my purchase and rehab cost back, and get 1.5-2% of cost in rent.

Regarding your costs, if you are financing the bank will need an appraisal, so thats part of your closing costs, is their a specific reason you want a survey? is there a CSM on file? usually between the GIS and the legal description you should be able to figure out what it is, the only time I have ever gotten surveys is new construction, because you have to to get a permit, otherwise unless there is something in question, I see little value in a survey. 

I hold most of my rentals in tiny towns in Northern and east central WI, so when you say Rural I play in Rural areas, I even have a rental on 7 ac. that 35 min drive to a town. I think you should buy something, and take the leap, but the deal you described is not a good deal, unless you can buy it at or below assessed value.

my single families I like to  be all in after rehab at $50-60K with rents around $800+/mo and have an appraisal after repairs of $100K  Duplexes have a bit more cashflow, but often not as high equity return. just my opinion, PM me if you would like to chat more.  

You may want to consider hiring a professional property manager, sounds like the tenants are taking advantage of you, if they break stuff they need to pay to repair or replace it, if their lease says they are responsible for snow, they can do it or hire it, but its their responsibility. A good manager will enforce these things or remove the tenant and find a new one. I find that my managers make me more money with less problems than when I self managed, they generally get better rent than I would charge and those costs you paid for, wouldnt have been your costs, so it would be like the management is basically free, or pays you. just my perspective.  

@Marcus Auerbach makes some very valid points, what I may add is Size of the loan, most of mine are small, $50k or below, so my first rental loan was commercial, I have 1 Fannie Mae, I borrowed $80k the rest are commercial with 15 year amortization, terms of 3 and 5 years, with high equity, so rate risk and refi risk is low. I see the cost of a secondary market loan (usually between $1300-$2700) to be a lot for a small balance loan, even the $80k I was on the fence, but I got a good rate on 15 year fixed, and paid $1300 for the loan (all costs) I still hold that one in my personal name, as I do several others, the LLC is a tool, but is often over emphasized, especially for new investors. Hope this helps.

Generally if the first lien foreclosure was filed correctly, and prior to the second lien filing foreclosure the second and any subsequent liens other than some government liens are wiped out, you would be responsible for cost of title insurance (if you want it) any back taxes or remaining special assessments, the most often missed costs are back water bills, city having to remove snow, and "Noxious weed cutting" (cutting the grass if its neglected)  the hurdle for many people is not having legal access to get an appraisal completed. Be sure to have 10% of your max bid with you at the time of sale in either Cash, or Cashiers checks (i recommend several checks stepping up from opening bid to your max bid) Cashiers checks must be made out to the counties Clerk of Courts they will not accept 2 party checks, or business or personal checks, and you cant run to the bank to get them after sale, they must be on your person at time of sale.  you will also need to complete and affidavit that you have no outstanding tax balances that are past due, know how you plan to take title, and prepare to pay the remaining balance within 10 days of the courts confirmation of the sale, this can occur as soon as about 10 days after sale to several months after sale, so be ready for possible delays in possession,   I had one that took 3 months to confirm. and I have others happen in about a week.   Good Luck!

Those seem crazy high, even with just 1 property, I have 27 doors with 2 property managers, my fees are 5.5% pretty much all inclusive, and 7% plus 33% first mo lease up fee . If I were you I’d probably keep looking. Unless it’s truly a top tier premium service and that’s what you want. 

sounds like you would be buying essentially turn key? while I am not a fan of turn key, (no upside till appreciation occurs) be sure to pick an area with good rent to value, as well as durability of rents, if you are in Chicago, consider Milwaukee and surrounding, Brew City REI on Facebook is a great group, with lots of Property managers and contractors, you need to learn the neighborhoods though. Personally I like tiny towns and country properties, yes there are unique risks, but I have had low vacancy and a little higher rents because there are few places to rent in many tiny towns. draw back is contractors and property managers are not plentiful. good luck!

@Josh V. Your PM’s in-house guys should be able to do that in like an hour and $99 faucet, and I mean a decent pull out for $99 not a cheap seperaye sprayer one those are like $29. So let’s say Faucet $99, an hour at $50/hr (my PM’s labor charge) plus a trip charge, often not applicable I’d say $20 should be $169 but for sure under $200, you got screwed.