All Forum Posts by: Nick Paul

Quick question to those on BP....I'm looking at a purchasing a foreclosure property that is currently owned by the Secretary of Veteran Affairs.

My questions......has anyone purchased a foreclosure from the Secretary of Veterans Affairs? If so, did you run into any issues with obtaining title free and clear of any liens and/or encumbrances?

I don't typically close without obtaining a title policy to ensure I'm receiving title free and clear of any and all liens. However, those deals have not been owned by an extension of the government. My thought is that in order for the Secretary of Veteran Affairs to be able to sell the property they would have to hold title free and clear of any and all liens or encumbrances. Thus, I've considered forgoing a title search on the purchase of the property. It would save some money on the purchase of the property, as I will be responsible for providing a title policy upon closing (as that is customary in New Mexico). I've tried to think of any liens that may have slipped past the Secretary of Veteran Affairs but imagine they have already done an in-depth title search to ensure they are selling the property free and clear. Anyway, I'm likely going to purchase the title policy simply to ensure that I am receiving title free and clear. Just wanted to see if anyone on BP has purchased a Veteran Affairs foreclosure and waived their right to obtain a title policy on the property.

Thanks for your feedback!

Thanks James

Thanks for the feedback.....what's a good depth for the rock to ensure I get the necessary coverage? I was planning to go with a 2"-3" depth coverage. Too much or not enough??

I agree with Joel, doing your research into the market and making sure that you are fully aware of your competition and the product they are putting out is crucial. Doing your due diligence will make or break the deal. Owners of the "mom and pop" (aka independent) type hospitality properties often are running two sets of books since this property type typically handles a lot of cash from its guests. This is not to say that all independent hospitality properties are operated in this manner, but it has been my experience that more often than not financials at these properties aren't always what they seem to be. So be meticulous in reviewing financials and tax returns.

As Joel stated, $50k in renovations is simply lipstick on the property. I'd be sure to ask for a detailed list of what was actually repaired or remodeled as part of your due diligence. That way you can confirm whether or not those items were in-fact repaired or replaced.

I'd even go so far as to recommend spending a week checking out all the independent properties in town (including the property you are considering). Stop by every night for a week at each property and make note of how may cars are in the parking lot. Ask to see a room at each of these properties to compare the quality with the property you are considering. Determine if there are any ways you could capture business from these other independent properties.

No legal advice

I own a 6-unit multi-family property in West Texas and am looking to make some changes with the landscaping. The property does not have a sprinkler system, nor do I want to invest the money into one. Water in West Texas is billed on a tiered scale and adding a sprinkler system would take our monthly water bill expense thru the roof.

That said, I'd like to have gravel laid over the existing grass (what little is left anyway). I'm planning to stake down plastic sheeting to prevent grass and weeds from growing up into/throughout the rock. I'll also be using steel landscape edging to prevent rock from transferring on to the sidewalk areas. Once that's done I'll have the gravel company drop off the rock and have hired help spread the rock evenly around the property grounds.

Any tips or insight to make this a smooth and hassle free project??

I'm new to BP and this is my first reply pot but I agree with @Joel Owens. There is no consensus as to what the "banks" strategy will be today or in the near future in dealing with the real estate conundrum. Like others have mentioned in this thread, there are simply too many variables that affect how banks will deal with these troubled assets.

I've been working with a number of regional, national and international lenders with regards to purchasing their distressed commercial assets and each has a unique view of how to handle these assets. Some have understood that they will be taking significant losses on assets whether they sell today or try to hold the asset and wait for a recovery in value. Others, IMO primarily international lenders, still have no clue what's going on within their own portfolio(s) so they continue to hold assets and allow borrowers to bleed the asset until nothing is left and the bank has no choice but to take back the keys.

In addition, these asset managers are simply overwhelmed with the number of troubled assets that they are responsible for handling. Prior to the RE downturn they were responsible for handling 10-15 files/assets/accounts (max 20) at any given time. Now they have 30+ to handle and are so swamped they are only able to do what they can do in a day.

All that said, banks will continue to act in an irrational manner to RE Investors. To try and understand the mentality or course of action banks/lenders will take with regards to troubled pptys/assets is like trying to understand what your dog is saying when it barks. You think you know, but in actuality you have no clue. Same goes for the banks/lenders at this point in time. We can all speculate and have an opinion, but no one truly knows what tomorrow holds.