All Forum Posts by: Eric Odum

try to find one who is actively engaged in the investment market, if that is the route you choose to go. Most residential Realtors focus on owner occupied dwellings. They could not help you with parameters of investment strategy and have little clue on how to determine whether a property is a good investment or not.

This site is a great place to start...see if there is a Realtor in your area that deals extensively with investment properties. If they decide to assist you, an experienced Realtor who focuses on investment properties can be an enormous assistance.

The challenge in working with agents on the buy side is they are going to gravitate towards where they have the best chance of getting paid. If you can only buy a couple of properties and you are working with 6 different agents, how much time will they be willing to dedicate to your cause? Probably not a lot. Their level of dedication to you will certainly be no more than the level of commitment you have to them.

tenant in common owners control undivided interests...so, yes, each owner can handle their proceeds independently of the other owner(s).

"The biggest problem with the 1031 is the timing. Finding a deal within your timeline can push investors into bad deals."

Great advice @Jeff Greenberg . Sometimes, paying the tax is not the end of the world.

I would agree with the others who say at least take a look at NNN properties, but be very careful in making the investment selection. This market is so very hot over the past 5 years and CAP rates are extremely compressed. You really need to take a very close look at the location and imagine it without that tenant. I could tell you some horror stories in relation to Starbucks properties when they coughed up over 600 units back in 2008. Many of the properties were leased to Starbucks at 7 to 8 times market rents, with over $200/sq ft in over build's. Trying to find replacement tenants at anything close to the prices paid for these assets was not possible and many investors took a bath.

Also, think about how the deals are structured. Many Drug Store leases are true bond leases with no inflationary bumps. Think about how that would effect the value of your asset and the return you are receiving if inflation were to take a sudden spike.

Most of the analysis is common sense, real estate fundamentals, but I have seen ordinarily smart investors relax those principals locking in to what they think is a stable return only to find out the "no way that scenario could happen" actually happen.

Anywhere in the Bay area, or confined to a specific municipality?

@Marquita Smith , probably not. That is not my cup of tea. I prefer to try and get a little higher return and have access to the deeper fee simple market, if I need to sell. In other words, I am more interested in buying the tax deed than the certs.

I think the due diligence process is pretty much the same. Go look at the property and make sure you would want to own it. Make sure you give yourself plenty of cushion on the bid that you are not close to the value of the property. Check the other tax liens and other government liens, like IRS. You can definitely get burned if you are not paying attention. I have seen Certs go to auction with a starting bid of $15k on a knock down and the lot is not even worth $5k. It makes me wonder what the heck the cert buyers were thinking.

Pretty sure that the mature certs have to go to public auction at a tax deed sale, which goes to the highest bidder after the cert holder has been paid their investment + return. I have bought numerous Tax deeds in Hillsborough County...actually living in one right now, believe it or not. There are typically other liens on the properties besides the tax liens and those creditors deserve a chance for some sort of remuneration, if not made whole entirely...which is what the auction process allows.

I don't think I would classify it as low risk. In every auction, I see a handful of cert holders left holding the bag on practically worthless parcels. The certs are not redeemed and no one bothers to bid on the property at the tax deed sale. At that point, the cert holder gets title, but many of these left over parcels are slivers and portions of land that you can not monetize.

It is a highly competitive business. Wells Fargo, Deutsche Bank, etc and multiple private equity firms bid on the certs in Hills County.

The bottom line is, do your homework. Check out to make sure the property has some value before bidding on the cert. Mostly, I would stick with residential...although under the right circumstances, I might consider an office or retail property (industrial areas and industrial properties carry a lot of environmental risk and probably best avoided) That is my 2 cents. Hope it is some value to you.

@Raymond B. I was wondering how to do that. Thanks!

You can definitely do it. But, you are competing with people that do real estate full time, so keep that in mind. Don't get frustrated, I guess is my message. I would highly recommend you check out the podcasts...there are two or three that directly discuss working full time and running a side real estate investment business. There are terrific educational tools on this site.

This is one of the more recent ones.

http://www.biggerpockets.com/renewsblog/2014/04/03/064-full-time-50-units-josh-sterling/