All Forum Posts by: Account Closed

Not aware of any such site. Because many of the properties advertised for sale don't actually get sold, it would be extraordinarily time-intensive to track the sales, either in real-time at the courthouse steps or checking public records after the fact.

What is the face value of the liens that he purchased? Since he doesn't have title, and can't guarantee he will ever get it, I wouldn't advance him much (if anything) more than face value. The cost of foreclosure was part of the deal when he bought the lien. It shouldn't be shifted to you up front. Now, I can see entering into a contract at whatever price, contingent on him being able to convey title, where you give him some refundable "earnest money" which he has permission to use toward his foreclosure costs (this is your scenario #1).

Scenario #2 seems less workable to me because the assignment just makes a cloudy title situation worse and would probably result in a massive mess if the owner redeems.

But in either case, your contract should clearly spell out what happens in the redemption/3rd party buyer situation because what you refer to as "atypical" is actually the norm - well more than 90% of tax liens get redeemed before foreclosure. At least in Georgia there is a healthy market for tax deeds on the courthouse steps (in essence the same thing as a foreclosed lien), and I imagine the same is true in Maryland, such that the risk of a third-party buying the property is also material.

@Shankar Balakrishnan In most cases, the lender will bid the amount of the outstanding mortgage debt plus interest and attorney's fees. They do that so as to have the opportunity to market the property on the MLS, where they can maximize the price, rather than a quick sale, all cash situation on the courthouse steps. Since most properties in foreclosure are underwater (otherwise the owner would just sell and pay off the note), the lender's bid will exceed fair market value in the majority of sales. The key is to find the second mortgage/ bankruptcy/estate/other situation where a property with equity above the first lien actually gets sold. This type of deal is few and far between, but you'll make good money when you find one.

My recommendation is to identify the 5-10 properties that you are interested in each month (there are free lists of the properties coming up for sale, do a google search), and then search the public records for the amount of the original mortgage debt. You can get a ballpark idea of what the initial bid will be based on the original debt and date it was originated. Calculate FMV. If FMV - debt - estimated repair costs exceeds the debt by a nice spread, you have a potential winner.

Again, just my non-tax guy understanding, but although one year is frequently mentioned as a rule of thumb to trigger the capital gains rate, I believe it comes down to intent. A one-year hold period could very well give rise to a presumption that you bought for investment. But if you have a pattern of buying, renting, and selling shortly after the one-year deadline passes, then you may be at risk in an audit.

Keep in mind that there is nothing magical about a one-year hold period. If you buy intending to sell in a year, rather than hold for investment, then you will likely be subject to ordinary income rates, although I'll defer to the tax experts on that.

If for some reason the tenant isn't out by closing, you should be able to file a motion with the court to substitute yourself or your entity as a plaintiff in the eviction. Keep in mind that evictions are typically an expedited process (at least relative to other litigation) so you'll need to move quickly.

@James Park Thanks for the kind words...

@Karen Margrave Good points. The future operation of the HOA is definitely the major variable. While the HOA was formed by the developer, since only one house was built, control was never turned over to the HOA and no fee schedules or by-laws have been established. So, the new developer coming in and imposing egregious fees is a risk. We have the CC&Rs.

What specific aspect of real estate are you interested in?

Good work, I've been looking into moving out of SFR land and buying a small multi-family, so you're well ahead of me. Make sure to go over those leases and rent records with a fine-tooth comb. Most people don't give up low maintenance, cash cows, meaning the current owner is selling for a reason. I'd be sure to find out what it is before I closed.