All Forum Posts by: Kyle J.

@Johnny Lynum  This is one of those things that will come up from time-to-time, and should be addressed in the lease agreement.  For example, my lease states "Tenant shall be charged for repair of drain blockages or stoppages, unless caused by defective plumbing parts or tree roots invading sewer lines."

So for me, it would be pretty easy to determine who would pay in the scenario you described (the tenant).  I would suggest you check your lease agreement to see if you have similar verbiage that might address how this should be handled.  (If it doesn't, definitely consider adding it in the future.)

@Padric Lynch  You might check out "How to Use Limited Liability Companies & Limited Partnerships: Getting the Most Out of Your Legal Structure" by Garrett Sutton.  (The author is also an advisor to Robert Kyosaki so you can imagine it's going to cover real estate.)

I read the book a long time ago (they have several newer editions now since I've read it), but I recall it had chapters dedicated to topics such as entity selection/formation/management, asset protection, LLC's and real estate, joint ventures and LLC's, estate planning with LLC's, etc.

I recall it being a pretty good book.

Never heard of him before, but I’d say the answer seems pretty clear when you look at all the information posted by others in this thread. The website provided for him above isn’t even active anymore.  

And then there’s this post: 

EDWARD BURNS FINANCES SCAM ARTIST (SCAMMERS LIST)

Just so you know, real private lenders are not typically out there emailing strangers on the internet to try to give them loans. That’s just not how it works. (It’s the scammers who are doing that.)

You can read my response under the following thread for some things to watch out for as well as tips on how to spot these scammers:

How do I spot scam lenders?

@Kasey Destache In California, you can charge a security deposit equal to 2 months rent for an unfurnished property, or equal to 3 months rent for a furnished property. This is separate from what you charge for the first months rent. 

So, in your example, you would be able to charge $1650 for the first months rent + up to $3300 for a security deposit (2x rent) if it’s an unfurnished unit. 

(That $3300 would include the pet deposit. You wouldn’t get to charge another $500 on top of that.)

@Vijay Chadalavada  For what it's worth, I've purchased several rental houses (also in California) that had termites. I'm not scared off by them.  I look at them as just another problem/expense to budget for and deal with.  And like most other problems (i.e. electrical, plumbing, foundation, etc), they can generally be fixed.  It just takes money. 

Then, once you treat/fix the problem, you just need to take some basic steps to prevent them from coming back (i.e. eliminate any areas of wood-to-ground contact, address any moisture issues, etc). 

If it's something you're really worried about though, there are companies out there that will sell you a warranty or an annual "protection plan" where they'll do free annual inspections and if the termites are found to have returned, they'll treat them again for free.  Of course, those plans can sometimes be costly so I've never purchased them (and I've never had termites return either).  But, like I said, it's an option if it's something you're really worried about.

@Conrad Martin  I guess you just have to know what your end buyers are looking for.  Do they want a property that's tenant occupied, or do they not want a property with a tenant in it already?  Like I said, if I was your end buyer, having a tenant already in the property isn't really a selling point as I prefer to select/place my own tenants and have them on my own lease agreement.  So, if anything, the loss of the tenant would make me like the property more.  

Not only that, but if someone wanted to do a rehab on the property so they could increase the rents, well you couldn't very well do that with a tenant in there.  Now, with the tenant gone, it opens up that possibility.  

Point is, you HAVE to know what your end buyers are looking for and what they want to do with the property.  Otherwise you're just taking shots in the dark.  (In my opinion.)

Hope it works out for you either way.

Tax liens aren't sold in California.  You might want to post what state you're interested in BUYING the tax liens in so people can direct you to a resource that will be the most help to you.  It's already been mentioned, but it's worth stating again, laws pertaining to tax liens vary greatly state-to-state.

@Conrad Martin  We only know the limited info you've posted, and obviously haven't read the contract, so it's hard to say for sure.  For example, was the paying tenant written into the contract as an actual term/condition of the sale?  Regardless, I'll give you a few thoughts that come to mind.  

If it's a single family property with just the one tenant occupant (which is what it sounds like), then those are typically valued based on recently sold comparable properties (not the income it's generating).  So the loss of the tenant doesn't truly equal a "loss in value".  

Second, since you made this post in the "Real Estate Wholesaling" forum category, I'm going to assume you're wholesaling this deal.  If that's the case, have you asked your end buyer what their preference is?  I know many end buyers (like myself) would actually PREFER to take possession of the property vacant so they can start fresh with their own tenant that THEY selected.  Just a thought.

Ultimately, if it is a problem in this particular case for whatever reason though, you should refer to your contract and see if it's addressed in there.  After all, that's the document that controls the terms/conditions of the sale.  

Good luck.

@Cortney Arenstein  Laws related to tax liens and tax deeds vary greatly state-to-state, and I certainly don't claim to be an expert on them in your state.  However, I'm very familiar with how they work in my state, and somewhat familiar with how they work in others.  

With that being said, I'm not familiar with any state where you can simply "pay someone's delinquent property taxes and then wait for the interest" or "get the deed" as if you then have some sort of ownership right in the property.  

What generally happens is, if a homeowner fails to pay their taxes, at some point the government/taxing authority will place a tax lien on the property and then sell that tax lien to third-party investor through a tax lien sale. The investor who purchases the tax lien basically buys the right to collect the unpaid taxes, plus interest.  (The investor is not buying the property though.)

With a tax deed sale, the actual deed to the property is being sold.  The investor who purchases a tax deed property actually owns the property after the sale.

This is just a very high level overview of both of these processes, and - as I mentioned - the laws with both vary greatly state-to-state.  Plus, not every state does both tax liens and tax deed sales.  Many just do one or the other.  

Ultimately, my point is just that you should probably research tax liens and tax deed sales a little more before you just "pay someone's delinquent taxes" because all that will likely entitle you to is a "thank you" from the delinquent homeowner.   

@Jace Halttunen It is certainly possible. There’s a couple things to be aware of though.

First, as Will pointed out, every wholesaler I’ve ever seen advertises to their sellers that they can do a “quick close” because they’re basically a cash buyer (or their end buyer is at least). However, if your end buyer will be getting a loan, you won’t actually be that quick. You’ll be just like every other retail buyer. (Appraisals are taking quite a bit longer right now.) But if you happen to find a seller who’s not in a hurry to sell, maybe that won’t be an issue.

The second thing to know is (more for your end buyer to know), a bank is not likely going to finance your wholesale fee. Reason being, it’s not actually part of the purchase price.

For example, let’s say you and the seller agree on a purchase price of $100k. You then assign the deal to your end buyer for a $20k assignment fee ($120k total price). If his lender requires him to put 20% down, it’s not going to be 20% of $120k, which would be $24k. It would be 20% of $100k ($20k) PLUS your $20k assignment fee ($20k) for a total of $40k. A lot more in that second scenario.

Obviously these are just rough numbers, but I think you’ll get the point. It’s something to be aware of so your end buyer doesn’t get caught by surprise. 

Ultimately, if none of that matters though, it can be done.