Just bought my first investment property...from the court house steps.

Just bought my first investment property...from the court house steps.

Rental Property Investor · Katy, TX · Member since 2013 · 64 posts · 13 votes

Hi everyone. I've been a lurker mostly. My first thread.

So after a couple weeks of attending trustee sales at the court house steps, I bought a property. Or at least I hope I did.

The process seemed so simple I didn't feel like I actually bought a home. All I got in return for my cashiers checks is a yellow sheet of carbon receipt for my purchase.

As I understand it, the title will be recorded within two weeks and I will be mailed the deed along with the refund of the difference I overpaid with the cashiers checks. Does this sound about right?

A couple hours after the auction, I stopped by the house. It looks good from the outside. I spoke with a few neighbors including the one right next to the subject property. He indicated that there is a family occupying it. He doesn't know if they are renters, the owner, or friends/relatives of the owner.

I just sent a note card today to the property addressing it to "Current Resident; RE: Home Ownership Change" and wrote "Important" across the left edge of the envelope and on the other side..."Urgent." Inside the note card, I advised them the house has been sold at a foreclosure sale and that I am the new owner. I requested for them to give me a call to discuss their options and that I am flexible. Is this the correct step to take? Any suggestions on what else I could have added or maybe left out?

The plan is to send another card or two before the title gets recorded. Once I have the grant deed on hand, I will bring a friend to the property and attempt to make contact with the occupant and determine their intentions. Hopefully by not getting in their face, I don't upset them and that they will not vandalize the property. Or perhaps I have already gotten in their face with the note card?

I wouldn't mind keeping them as a tenant if they qualify and are willing to pay my asking price for rent. But my preference is to get it vacant and have it resold within the next few months before the summer selling season ends.

Any suggestions on my course of action to acquire possession?

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Investor, Real Estate Agent · San Juan Capistrano, CA · Member since 2013 · 150 posts · 65 votes
13y

Hey Joe,

Congrats on your purchase! We usually go ahead and serve the 3/90 day notice to quit on the door, along with a letter similar to the one you mentioned, on the day we purchase the property. We also put on there a cash for keys option and that usually sparks a call. We only flip, so we try to work something out with the occupants so they move in a timely manner.

If they don't want to talk/negotiate with us, we just start the eviction after 3 days. There are some risks starting the eviction before you have recorded your trustee's deed, but we have never had an issue with it. I believe you have 10 days to record after you start the eviction, but you definitely need to speak with an eviction attorney about all that.

It's also important to make sure the occupants are not bona fide tenants. If they are, you will need to wait until the 90 day notice expired before you can start an eviction (assuming they continue to pay you rent)

Hope this helps...

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  • Real Estate Investor · Hampton, VA · Member since 2012 · 562 posts · 109 votes
    13y

    Joe C.Welcome and congrats on your purchase. Sounds like your on the right track with the new owner introduction. Hopefully they will contact you and it will be a smooth transition for both you and the current occupants. If not, then I am assuming you may have to go through the eviction process..Good Luck!

  • Rental Property Investor · Portsmouth, VA · Member since 2013 · 4 posts · 0 votes
    13y

    Was this a tax lien or a tax deed sale? I know when taxes are involved, there is a period of restitution for the owners, its usually between 1-2 years, depending on the state.

  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    13y
    Originally posted by Joe C.:
    So after a couple weeks of attending trustee sales at the court house steps, I bought a property. Or at least I hope I did.

    Wow, you are brave! I don't think I would have the guts to buy a property without actually seeing the inside. I hope everything goes really well for you!

  • Real Estate Investor · Cleveland, OH · Member since 2013 · 173 posts · 18 votes
    13y

    Great job, hopefully your initial written contact with the people occupying your property will result in them getting back to you and not vandalizing your property. Either way stay on top of things so you can minimize your risk/damage.

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    13y

    Quite interesting. Just about everything you posted is the opposite of what I do. Not that what you are doing is bad... everything usually works out.

    Maybe it's a California thing. I just hope you don't experience what @Will Bernard went through in his The Occupants from Hell! post. Possession is kind of important. Show stopper for many. It has stopped me on some occasions.

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    13y

    If I'm bidding at auction, I always knock on the door first to chat with the occupant to see the situation. also, you can at least get a peek around. A nice personal approach shouldn't create any new problems.

  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    13y

    I have mixed feelings. Might have been a great move...might end up with occupants from hell as mentioned in the previous post. Although you are already invested in this one, next time you might consider door knocking before an auction and finding out what might await you. I often go look over properties before an auction and often find them vacant. That encourages me as far as getting a quick easy possession though sometimes it is difficult to get interior inspections. Good luck!

  • Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Not sure about Northern Cali or else where in US but in Southern Cali, its difficult to knock on all the doors and check out all properties before auction day. The main reason is because there are so many properties listed and only a few that are actually available to bid. You would literally spend all day every day checking out properties and find out 99% of them are postponed and canceled.

    These are the disadvantages of acquiring properties at the courthouse steps, you cannot get the house inspected, have to purchase the property in full cash, people could be living there still, etc. Also, due to the rising prices, I have found courthouse properties are being purchased close to retail prices. Which is very absurd because why have all that risk and still pay market prices? Again, this is what I've noticed only in Orange County.

    Joe C., did you check the loan position? And verify title? This is absolutely important, you have to ensure that the loan is in 1st position.

  • Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
    13y

    What the rough numbers you’re looking at on this property ?
    (rough –> due to unseen interior )

    Maybe add exterior and interior photos when possible

    I been attending one of my local weekly sheriff auctions,
    but I plan to watch the process and game players for
    next nine months before considering pulling the trigger.

    Court auctions in Waukesha normally takes 34 minutes maximum

    I noticed most of the properties our purchased back
    via bank representatives and hardly any investors bids.

  • Rental Property Investor · Katy, TX · Member since 2013 · 64 posts · 13 votes
    13y

    Andrea M. Thanks for the warm welcome.

    And thank you all for the well-wishes.

    Chris Martin I'm curious to know how you normally play it out. Do you start with the eviction straight away? What Will Bernard went through is quite intimidating. However, I am emotionally and financially prepared for the worst but hoping for better.

    Jimmy Hong You are absolutely correct. There are far too many cancellations and postponements to make previews worthwhile, IMO. I have a trusty team member that does due diligence on title, position of deed of trust, and liens for me prior to bidding. I only bid on those she clears for me.

    I actually put in many offers with realtors in attempt to purchase at retail prior to bidding at the steps. I figure if I am willing to pay retail through realtors why not try to get a small bargain at the steps. And a small margin it is...only about 10% discount from what I believe is retail. No closing costs so that's a little more savings there. Prices have gone up about 25% from 12 months ago and in the recent months they are going up 5-6% each month. I figure the rewards in this market outweighs the possible (but not extremely probable) troubled occupants and damages.

    This brings up a question actually. This home is built by KB Home in 2011. I heard that builders provide warranties for up to 10 years. I know this doesn't cover vandalism and/or abusive usage and what not, but just wanted to see if the warranty transfers with title or is it only good for the original owner?

    Joe

  • Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Sounds like you have your bases covered Joe C.. Keep us updated on your property. I know I would like to see another success story.

  • Investor, Real Estate Agent · San Juan Capistrano, CA · Member since 2013 · 150 posts · 65 votes
    13y

    Hey Joe,

    Congrats on your purchase! We usually go ahead and serve the 3/90 day notice to quit on the door, along with a letter similar to the one you mentioned, on the day we purchase the property. We also put on there a cash for keys option and that usually sparks a call. We only flip, so we try to work something out with the occupants so they move in a timely manner.

    If they don't want to talk/negotiate with us, we just start the eviction after 3 days. There are some risks starting the eviction before you have recorded your trustee's deed, but we have never had an issue with it. I believe you have 10 days to record after you start the eviction, but you definitely need to speak with an eviction attorney about all that.

    It's also important to make sure the occupants are not bona fide tenants. If they are, you will need to wait until the 90 day notice expired before you can start an eviction (assuming they continue to pay you rent)

    Hope this helps...

  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    13y
    Originally posted by Joe C.:
    I actually put in many offers with realtors in attempt to purchase at retail prior to bidding at the steps. I figure if I am willing to pay retail through realtors why not try to get a small bargain at the steps. And a small margin it is...only about 10% discount from what I believe is retail.

    Another option is to invest out-of-state which is what several investors out of California on here have done due to prices ... Ali Boone and Mehran Kamari are a couple of names to throw out there.

  • Investor · Wichita Falls, TX · Member since 2010 · 3k+ posts · 603 votes
    13y

    Yes, one thing to consider about California is that it is NOT landlord friendly :) There are still lot's of people investing here though!

  • Abhay K.Pro Member
    Investor · Fremont, CA · Member since 2012 · 64 posts · 45 votes
    13y

    You are brave Joe! You confirmed what I had heard about auction pricing in that area - small discount to retail.

    I have heard auction buyers offer some cash (2-5k) to get occupants out with no damage and that usually works.
    Don't try to keep the occupant as tenant. You want to screen tenants properly otherwise that can cause more heartburn.

    Good luck, hope it works.

  • Rental Property Investor · Katy, TX · Member since 2013 · 64 posts · 13 votes
    13y

    William Larsen I will likely take your suggestions. I will speak with my eviction attorney about it first.

  • Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
    13y

    Congratulations Joe. I wish you much more success to come.

    Kudos,
    Mary

  • Rental Property Investor · Katy, TX · Member since 2013 · 64 posts · 13 votes
    13y

    Update: The occupant called me over the weekend, after receiving my notecard. We made an appointment to meet so that she can show me a lease she says she had.

    I met with her at the house yesterday and she did not have a copy of the lease. Nonetheless I asked her what her plans are knowing that the house has been sold to a new owner. She says she cannot afford to stay. I offered her $1,000 to leave by Aug 9, 2013 or $1,500 to leave by July 24, 2013. She agreed to definitely leave within 30 days but wasn't sure if she can leave within 2 weeks. She and I signed agreements for both options. Keeping fingers crossed that she will comply.

    FYI The California Association of Realtors offers a form "Cash For Keys Agreement." This is the agreement I used. Glad to see my dues are being used. =)

  • Rental Property Investor · Katy, TX · Member since 2013 · 64 posts · 13 votes
    13y

    By the way, all my friends had to work. I thought my plan to hire a day laborer from the local Home Depot for an hour or two was a great one but I couldn't find them hanging out at Home Depot close to the subject property. I always see them hanging out at those closer to home in Hayward.

    So I ended up going alone. I knew the neighbor would be home cus I spoke with him before and he indicated he works from home. So I knocked on his door prior to meeting with the occupant at the subject house. Told him my story and that I will check back with him in fifteen minutes...if he doesn't hear from me please call the cops. haha.

    All went smoothly. I didn't want to enter the home alone so I just discussed everything with her on the driveway and signed everything there. Checked back in with the neighbor and went on with my day.

    I figure the important inspection would be that one at day of the exchange for cash and keys (i have a feeling I am wrong about this thought process). That day I definitely need to plan farther ahead and bring someone with me.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    13y

    Glad to hear it's working out for you Joe.

    On a side note, for some reason the Home Depots in Stockton aren't a great/reliable place to find day laborers like Home Depots in other cities. I know when I go to pretty much any Home Depot in Sacramento, I see tons of laborers. However, I rarely (if ever) see them at the ones in Stockton.

  • Investor · Stockton, CA · Member since 2013 · 92 posts · 12 votes
    13y

    Joe C.Kyle J. the day labor guys are at the McDonalds/gas station on Center and Lafayette. Right across from the crosstown offramp. Be glad to help either of you with your properties.
    Good luck Joe.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    13y

    Thanks Patrick. Good to know.

  • Rental Property Investor · Katy, TX · Member since 2013 · 64 posts · 13 votes
    13y

    Thanks for the info Patrick Martinez. Could come in handy in the future. Your kind offer is much appreciated. Thanks.

  • Rental Property Investor · Katy, TX · Member since 2013 · 64 posts · 13 votes
    13y

    Update:

    I received the trust deed on Friday afternoon and just recorded it this morning. I guess we can't escape the transfer tax. Thank goodness it's only a couple hundred.

    I tried to follow up with the tenant/occupant over the weekend. Called a few times over the weekend and did not get any response. Decided to start the eviction process. Hired an eviction service to go forward with it. They are serving the 90-day notice today for a cost of $75.

    I tried calling PG&E to get info on the name of the account holder to the servicing address and they won't budge on releasing any info. The good news is they (as well as the eviction server I am using) reassured me that what ever the usage or bills incurred are completely the responsibility of the account holder, not the homeowner.

    The water company was able to confirm the account holder's name after I gave them a name. They won't share anything else. The eviction service says water fees incurred and unpaid will be billed to the homeowner.

    Spoke to insurance agent. They quoted me on a $5,000 deductible plan for a vacant property with a premium of almost $2,400/yr with a minimum cost of $250 and them prorating the rest of the usage since I plan to resell very shortly.

    I am learning from this process and hope would be investors can also learn along the way.

    Joe

  • Stony Point, NY · Member since 2013 · 11 posts · 2 votes
    13y

    I'm a new investor and I am definitely rooting for ya!

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