All Forum Posts by: Stephen Preston

Thats awesome @Arnie Abramson I am hoping to get out to some of the smaller counties to check out the sales!

@Roy Oliphant

Great post. I have bought vacant land that was classified as "Homestead" as the classification had remained from previous years. Vacant land, however, cannot have a homestead classification and I was able to get this changed so I could sell the property in 180 days as opposed to two years.

Non homestead redemption period - 180 days

Homestead - 2 years

Texas is a penalty state, if non homestead property is redeemed anytime within the 180 days the former owner must pay a 25% penalty.

For homestead properties, the former owner must pay 25% if redeemed in year 1 and 50% penalty if redeemed in year two.

@Suzanne Breimann Welcome!

Good decision on not buying the $41k coaching package! You will find all the info you need at Biggerpockets and through other sites if you are willing to take the time to research and read.

Texas is a great market. The population in the Texaplex region (Houston, Austin, Dallas, San Antonio) is exploding. Great time to be a real estate investor in Texas!

Best of luck,

Stephen

There are over 250 counties in Texas and each have tax sale auctions. Some of the large counties will have auctions monthly while smaller counties may only have them once a year. Generally the larger the county (population) the more competition.

Harris county (Houston), for example, has a tax sale on the first Tuesday of every month. You can expect a few hundred properties to be sold at each auction. I have been going to these auctions for years - they use to account for about 80% of my deal flow but with competition at an all time high, that has dropped to around 10%.

For a number of counties: you can find the tax sale lists here: http://www.lgbs.com/ (Including resale)

As far as due diligence is concerned here are a few things to consider:

1. These properties are sold as is where is, I have seen TONS of investors lose their shirts because they did not do their proper due diligence.You cant see inside the property. I do not buy vacants, I want to make sure that there are at least people living in the property and that it is habitable. 

2. Have an exit strategy in place before you buy - are you going to wholesale the deal? Fix and flip? fix and hold? 

3. Make sure to have a lien search done on the property (look for IRS liens, Handyman Liens, HOA Liens).

4. Review the tax suit - you need to make sure that all parties that have an interest in the property (mortgage holders, owners etc.) have been notified of the sale. If the owners weren't properly served, for example, you can find yourself in a long legal battle over title. If the homeowners weren't given proper notice, its pretty back and white - you will lose in court.

5. Call the county to determine if the property is classified as homestead or non homestead as this will determine the length of the redemption period (6 months vs. two years).

6. Call the county to make sure there are no additional back taxes owing on the property besides whats in the estimated minimum bid. The last thing you want to do is buy a property and then receive a notice in the mail that you have a tax bill owing for $20,000 as the new owner (congrats!).

Hope this helps! 

Stephen

Hi Charles:

I have been to over 30 Tax sale auctions in Houston and good multi-family properties are extremely rare to come across. The buildings I have seen get auctioned for the most part are vacant and need a ton of work to get operational.

Stephen

Hey Mark:

I have purchased over 30 properties from Wholesalers. 

Most wholesalers I deal with move property pretty quickly (sometimes in as little as 6 hours after sending the deals out). Because I have done alot of business with them and they know I can close I often times get deals sent to me before they go out to the general investor list.

To answer your question, I do my numbers on the property, get my contractor over ASAP and if the numbers work at the asking price, ill take it. If not, I simply move on. That being said, there have been times where I have come back with numbers that didnt match what the wholesaler was saying (IE increased renovation costs, etc.) and I make a new offer based on that. The worst they can say is no.

At the end of the day, dont be afraid to offer less than what they are asking but also, don't lose out on a deal because you are trying to save a few bucks. If the deal truly is good it will likely sell in 24 hours or less at asking price (in my experience - I am sure this varies depending on how competitive a market it, how many investors the wholesaler works with etc.)

Congrats on your first flip!

Hi Elliot:

I have been to over 30 auctions in Texas. The last two years have seen quite a bit more competition then there use to be. I find it easier to buy distressed as I can access the property before I buy unlike the properties sold at auction.

As far as deals go, you have the sales list and the resale list. The resale list is comprised of properties that didn't sell the first time around (most likely because the starting bid was too high).

Resale list has some decent opportunities but there is ALOT of junk.

Anything specific you want to know?  

I have bought and been to many auctions in Houston. I'd be happy to help answer any questions.

No problem @Martha Alex let me know if I can help in any way. There are lots of hurdles for Canadians getting into USA real estate but the benefits far outweigh the risks IMO.