All Forum Posts by: Simon Campbell

I can't say that I specialize in it but I have a few friends that say that in the right market it can be extremely profitable. Look for vacation areas that bring longer-term renters. For example, in Northern Michigan, many older ones leave the frozen north and winter in Florida or Arizona. During this time, they rent their houses out to Southern Michigan vacationers that come up to ski and participate in other winter sports. 

Just 1 or 2 months of renting out their home can cover their mortgage payments for almost a whole year.

It sounds like you have really done your homework on this (no college pun intended). LOL. But the decision sounds like one that needs to be based now on where YOU and your daughter want to live.  

Both properties will allow you to live rent free. Do you need the 4-plex income to survive financially? Would this income free up more time to spend with your daughter? Would you feel safe having your daughter living on a property with 3 other rental units? Will there be space either on the property or near a park so that she can play outside?

Answer those questions and you will know the answer to the first one. 

This is going to be a very limited market and may not have a good time and expense to purchase ratio as other advertising methods or market groups. But I definitely could see a potential for a good fix and flip return since most buyers couldn't look past the trash, mold and stink. Have fun with that market!

Taking over the payments is not as easy as it seems. Assuming a loan requires (1) that the original mortgage allows for it which is rare these days, (2) the buyer will have to meet the same qualifications as getting a new mortgage, (3) there are closing costs and (4) often the interest rate is much higher than current rates which means the property will cost you more. 

Much of the success in this market will come with presentation. You want the house at the lowest possible price. They want the most out of the house (naturally). You need to come in to "help" them.

If they respond to your letter, then they are considering selling. Even before talking numbers, you need to kindly find out why. Once you know why, then you are in a better position to satisfy that need - and get a good deal.

Even if you call them and do not have a clue as to a proper asking price, it is okay. Ask them when they bought the house and for how much. (Even if you know that information off the county records, do not tell them. Build trust, not power.) Then find out what they need to get from the house and what price they would like. Then say you will consider their offer and get back to them in a couple of days.

Do they owe $730k or $440K? That makes all the difference in the world. The $440K is an easy deal. Any sales price over $440k plus closing costs is cash in their pocket.

If they really owe $730k then they are up a creek without a paddle and the only two options would be a short sale (which they have to work with their lender to accomplish) or just stay in the house until they are foreclosed on and are evicted. If they stop making payments (might as well), then they get to live "rent free" for months maybe even years.  

Do you know what you would want to pay for the house. Since it is vacant, you could peep in the windows and see what kind of condition it is in. Also, get the property record card from the tax assessor to find out more specifics about the house. Check the county records to find out what they paid for it and if there is a mortgage on it and about how much is left to pay.

Once you know your number, you have a position to negotiate from. Then ask them if they would be willing to sell and if so, how much would they want.

With tax auctions, it depends on the local standards. They will set a time limit to allow the original homeowner to pay back the taxes plus interest and penalties. The beauty about this is that you as the investor is in a win-win situation. If they redeem the property, you get all your money back plus at a hefty interest rate (often 12% or higher). If they do not redeem, you get the property. 

I like to look at tax foreclosures as super profitable short-term bond investments rather than buying property since most do redeem.

A tri-plex (not including the garages as storage units - which I would not mention to the lender) can be financed under a residential 2 - 4 family mortgage. This will give you a better loan rate. 

Before moving forward, I would do more research with hard numbers to see is the deal is viable. If from this point you think it is, then by all means get it under contract with a contingency that will let you out if you cannot get the actual numbers to work. 

That could explain why she does not have the property listed with a real estate agent. Being required by law to fill out a seller's disclosure and then being held liable for the information contained therein would set a dishonest seller's teeth on edge. If she does agree, I would definitely opt for a very though inspection and hard estimates.