Needing Advice on tax deeds. And funding

Tax Liens & Mortgage Notes
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Needing Advice on tax deeds. And funding

Kevin Elledge
Contractor · Niagara falls, NY · Member since 2012 · 2 posts · 0 votes

I have looked over the forums for hours in the past few days with surprise to the wealth of knowledge here. I need some advice or guidance if you will.
I have be talking with a man in my area that owns around 13 properties or so in the Niagara falls area some of which I am interested in. Most homes he owns are assessed at 40k. I had my lawyer right up an offer on one house for 20k and this house needs around 10k into it to be livable hoping to make return on resale. After around 2 months I got a call he wanted 25,000 I said I will see what I can do... But I will not pay more that 20. After looking in to the house he owes 12k in back taxes and after running his name he owes 89k on all his properties total in city tax and 20k in county tax.

Is it was mentioned to me that I can pay his tax and the city of niagara falls with issue a deed.
Would this be revoked if he files bankrupcy because I hear that is what he plans on doing to take care of so of his debts.
Are their ways to get funding to pay for these houses before they go to the auction block in September.
Or should I just walk away...

Thanks
Kevin

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  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    14y

    This is not my area of expertise but I'll throw some thoughts at you.
    First, you need to be a bit more specific and provide more info. Which auction block are you talking about? Are the properties in foreclosure or is it the tax auction?
    Second, bankruptcy can't remove tax owed.
    Third, assessed value means zero. What are the properties worth in the marketplace?
    As a negotiating tip, if you are firm at 20K, don't tell him you will see what you can do on his 25K counter. Because that leaves the ball in your court with you having no intention of moving up. Tell him 20K take it or leave it and that puts the ball back in his court.

    Each state works differently on tax deeds. In mine, it takes years and a lot of hoops to jump through between buying the tax lien and getting possession. You need to know your state's process.

    IMO, it sounds like he is in deep and you are only 5K apart on a deal. Work the deal and try to buy the house. However, the 12K will have to be paid one way or another if you buy the house so maybe 20K is impossible.

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y
    Originally posted by Eric Michaels:
    ...
    Second, bankruptcy can't remove tax owed.
    ...

    That is correct - but bankruptcy is often still used as a delaying tactic, since there is this thing called an "automatic stay" that happens with bankruptcy declaration, effectively putting a (temporary) halt to any legal proceedings that the bankrupt party is facing.

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  • Kevin Elledge
    OP
    Contractor · Niagara falls, NY · Member since 2012 · 2 posts · 0 votes
    14y

    Eric thanks for the reply... I realize that with him filing for bankruptcy HIS tax will remain also any violations currently on those properties will follow the owner not the property. My area has really cracked down on slumlords I was quoting repairs for a man a short time ago that lost his house due to back taxes and the city brought him up on charges for repairs and the judge said "I want these items fixed or fines and jail time will be imposed even if you have to buy the property back to do them" fines were 200$ a day per violation... I was holding at 20 due to profit margin with repairs will be to low if I go any higher. I was trying to due the man a favor not take advantage. I am also aware assessments are worth less I was just stating them to gauge taxes and total up his debts around 100k.
    The properties I want are valued ranging from 35 to 50 in the current market. They are in REM with the city now they are being taken in September the city told me. I was offering half of market value on all of them around 20 a peice I spoke with him this evening. I also told his a firm 20 on the original deal:) and asked him to sleep on it. Im in no hurry it's not my clock counting down.
    Does anyone know any lenders that will loan around 60-80k for 4 or 5 properties. The other remaining 5 muti families he said he would let go to auction or sign over for taxes but the taxes owed are to high and needs alot of repairs nothin that can't be done but the time is too much right now. I would be better just biding later at auction I have the inside story on them so I know when to stop when the bidding gets high.

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  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    14y
    Originally posted by Steve Babiak:
    Originally posted by Eric Michaels:
    ...
    Second, bankruptcy can't remove tax owed.
    ...

    That is correct - but bankruptcy is often still used as a delaying tactic, since there is this thing called an "automatic stay" that happens with bankruptcy declaration, effectively putting a (temporary) halt to any legal proceedings that the bankrupt party is facing.

    Yes, BK is a delay tactic in FC proceedings. In my area BK doesn't slow a tax lien auction.
    Still unsure which "auction block" the OP was referring to.

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