All Forum Posts by: Soo Y.

Thanks for the replies.  I would figure another $15K-$20K for carrying (taxes, interest) and closing costs, excluding sales commissions.

I know this is dependent on the individual but what is your hurdle return on a standard fix and flip?

I'm considering purchasing a SFR from a wholesaler. These numbers make sense to me but would like to get your thoughts:

1. Purchase price: $550,000 for existing ~2,000 sq. ft. 4 br, 2 bath house on flat, 14,000 sq. ft. lot in quiet cul-de-sac;

2. Rehab costs to expand the first floor and second floor (add-a-level) should be between $200K-$250K (total of ~3,000 sq. ft.); and

3. ARV = $900K based on a similar after-rehabbed house that just sold two doors down (also ~3,000 sq. ft.).

Caveats:

1. For some reason, the high end inventory in Glen Rock doesn’t seem to be moving well, notwithstanding the house two doors down received multiple offers.

2. The rehab will take at least a few months so I'm cautious that the market may turn by that time and we'd be in the off-peak season.

Thanks in advance for any thoughts on any additional considerations or whether I should take up this project.

Thanks for your reply.  I would be paying all cash so no financing involved.

My issue is I wouldn't want to invest the time nor money (atty's fees, inspection, etc.) if they won't be able to give clear title.  Separately, the federal lien is 7 figures.  I just don't see the government giving the owner a pass here.

Here is a real-life scenario:

1. SFR listed on MLS;

2. Same SFR also has a Lis Pendens filed against the owner and is scheduled to come to sheriff sale next month;

3. Lis Pendens was filed two months before the United States of America put a federal lien ($$$!) on the property because the owner is liable for restitution in a criminal case;

4. Because the Lis Pendens was filed prior to the federal lien, the USA was not a named defendant on the Lis Pendens;

4. Seller's MLS listing agent claims not to know about the federal lien, speaks with Seller's attorney and attorney tells agent that they will be able to deliver clear title (attorney did not state how);

5. Seller's agent pushes for a written offer, noting that the Seller is very motivated (obviously).

I hope you're able to follow the above.  Questions:

1. Could the sheriff sale move forward with the LP not listing the USA as the defendant?

2. If so, does that mean the federal lien stays with the house notwithstanding a third party purchases at auction?  Typically, even if the USA is a named defendant in a foreclosure action, the government has either a 120 day or 1 year right of redemption.

3. Short of Seller paying off the federal lien ($$$!), I cannot see how Seller could give clear title.  Could you?

Do you know precisely how much time in NJ?  I have done a tenant eviction before and that was about three weeks from time of filing to the actual court date in Bergen County in 2016.  But where the eviction is the former owner in a foreclosure setting, I do not have any reference points.  Please share if you do.

And in filing for eviction immediately, is the rationale that their credit is already messed up from the foreclosure anyway that the eviction won't even matter if the former owner were to apply for a rental because they won't be approved anyway?

This is a hypothetical so assume sheriff sale.  But I'm not sure if an online auction makes a difference because I do not believe the auctioneer warrants that the house is vacant. 

A couple of questions for those who dabble in sheriff sales and foreclosures:

1. What is your playbook when the existing owner still lives in the house after you win at auction?

2. If you do cash for keys, how much do you typically offer and do you scale down as the time frame gets pushed out?  (E.g., $X if you leave in Y weeks, $X-something if you leave in Y+ weeks).  Fill in X and Y.  Bonus points if you could identify your geographical market.

3. Assuming the existing owner rejects your offer, relationship generally goes south and you seek judicial eviction/ejection, how do you guard against the existing owner destroying the house or stripping it down?

Finally, if anyone has done this in NJ, I would love to hear your experience.

Thanks.

Based on what I've read here on BiggerPockets, it seems that the IRS's 120 day right of redemption period is merely a statutory right that the agency has not/does not actually exercise(d).

Would it even help me as a 3rd purchaser of a property at a sheriff's sale to start the demolition phase of construction during this 120 day redemption period?  This is because the demolition would actually reduce the value of the property and likelihood that the IRS will redeem.  In the event the IRS actually redeems, I understand I would be out the demolition money but that would be acceptable to me.

Ultimately, the question is could one be liable to the Treasury for reducing the value of property that one owns but where the property still subject to IRS's right of redemption?

Property A is a 800 sq.ft. condo and Property B is 2,800 sq.ft. townhouse; both are part of a condo association.  The properties are in different towns but both are in upstate NY.

Details:

Property A

REO - potential purchase price from bank: $170K, move in condition

Current market price for similar units (non-foreclosure setting):  $190K, steady market

Potential rental income:  $1,500/month

Expenses:

Property taxes:  $4,000/year

Condo Fee:  $3,300/year

Insurance:  $400/year

Property B

Sheriff sale - potential max bid price:  $370K, currently has a tenant paying $3,400/month

Current market price for similar units (non-foreclosure setting):  $475K-500K, steady market

Existing (and potential, if tenant stays) rental income:  $3,400/month

Expenses:

Property taxes:  $13,000/year

Condo Fee:  $3,600/year

Insurance:  $500/year

Questions:

1.  If you had to choose one, which Property would you choose if your strategy is to buy and hold?

2.  Which Property would you choose if your strategy is to buy and flip?

3. I have enough cash to do only one of these outright. But if I were to use leverage (drawing down money from a HELOC at 4% (assume enough to fund both Properties with debt and cash)), what is the optimal leverage/cash ratio to use on each property?

Thanks for any insight.

Steve, does your lease say whether the tenant could be liable for attorney fees as additional rent?  This is called fee shifting and a NJ judge will allow it as long as the fee is reasonable and your lease provides for it.  Confirm with your attorney.