All Forum Posts by: Colin Perry

Pretty work @Omid A. , congrats!  Good discussion with you and @Alex T. as well.  You both made some great points and I'd agree that no matter how you slice it, this is a deal to be proud of.   

@Account Closed yes that is what happened.  Didn’t think that could happen myself.  

Hey @Sal Castaneda , sorry to just be getting back to BP after a hiatus. The ARV was $510k. Someone else came in and bought this directly from the owner subject to the tax lien a few days before the auction ended. Maybe that was the best thing for me, maybe not. I'll see what happens with the lady who bought it. Will be interesting. Thanks for your response and again sorry for my delayed one.

Colin

@Sal Castaneda about $110k.  Lender is owed $135k.  To get this, if I can get it, I'd be paying more than those combined debts/liens, so hopefully the only ball they'll play is settling up from the excess foreclosure funds.  I'll find out tomorrow if there are more liens.  If not, does that sound right to you, IRS would be made whole thru the excess funds thus that problem has a light at the end of the tunnel?

@Brett Goldsmith thanks that is what is logical to me, thanks for confirming.  Full title search will be complete tomorrow so I'll know if there are any more liens to cover.  

@Andy Mirza thank you for your thoughts and consideration.  Passing may be the right play, but I can't see how much I'd learn in that way honestly.  I agree $150k is a lot of money for a rehab.  Doesn't that help my argument for going for it though?  By having that expectation going in and being comfortable with the expected profit at that level, couldn't you say I've got my eyes open.  If I had a proforma with $60k and it really cost $100k that would sting, but if the opposite holds true and I budget for $150 and come out at $100 then I'm a happy guy that day.  

I did get an opinion today from one source that I respect and has experience in rehabs (yes only one so far).  I told him the size (1800 sf) and age of the house and he couldn't see electrical replacement costing more than $12k, plumbing $12k, HVAC $10k.  Obviously there's a littany of other potential repairs I haven't listed (structural, kitchen update, baths, paint, windows, flooring, roof) - but he didn't see $100k total even if things were bad off.  For sure I'm not taking one man's word, but that was good to hear.  

Regarding how I'd acquire this one, I've got a nice cash infusion ($140k after tax) from a pending sale on a rental and also a partner who is better funded than me. I'm expecting we'd use our own cash to purchase. For the rehab I can tap into an unused HELOC if need be, but my partner might carry a heavier load on that.

I recognize that I could very well have rose colored glasses and there is substantial risk on the horizon.  Please don't let anything in my response deter anyone from persisting in a different perspective.  

Regards to all,

CP

@Karen Thomson thank you. 

@Brett Goldsmith I'd be acquiring the property via a trustee foreclosure.  More info, the deed of trust was recorded before the IRS lien.  An attorney with a title company told me the following:  

"When I insure properties post-foreclosure that involve IRS liens the first question is was the lien filed before or after the DOT was recorded. If filed before the DOT the lien survives foreclosure. If filed after the DOT then the lien is junior in priority and is wiped out by foreclosure provided the IRS gets at least 25 days note of the sale. If IRS doesn't get proper notice the lien is undisturbed and remains a lien on the property.

The other thing to keep in mind is that even if the IRS is given proper notice they maintain a 120-day right of redemption. If they do redeem they will pay the purchaser at foreclosure the high bid amount, and some costs. Practically speaking that means if property is being purchased to rehab and flip a risk is being taken if improvements are made before the 120-day redemption period expires."

That jives with what @Wayne Brooks says (thank you Wayne!).  

The question I'll be trying to answer tomorrow is this -- if my purchase price at auction is higher than what the lender and IRS are cumulatively owed, does the additional money above making the lender whole go towards satisfying the IRS lien -- thus putting out that red flag fire either way?  

Thanks Amanda G.  I have time to learn, but not time to learn before the red or green light decision on this one due to the upset bid period limits.  I've made a few of those calls you suggested already regarding foundations.  I'll take your suggestion and make similar calls to other trades. Thanks again.  

Related question here.  I just found out that the owner of a house, which is currently in the foreclosure auction process, has a sizeable IRS judgement against him.  If I were to acquire this property at the auction, am I inheriting a huge title and/or judgement mess?  I know any seller profits from a sale can be taken to satisfy a judgement, but this person would be losing the house to foreclosure and thus there is no money to take.  

Thanks for the your knowledge.  

Hey Jonathan, 

Are you sure the 9 beds are legit?  That sounds pretty heavy for that square footage.  Make sure to do your due diligence and @clintshelley is right, you need more info on market rents.  Good luck and if you don't like that one for some reason, keep your head down and keep looking.  The more you do the more clear it will become what is good and what isn't.