All Forum Posts by: Dan Mahoney

@Evan Macbeth These are a few of the reasons title insurers are reluctant to insure tax deeds without a quiet title action.  It is a murky area.  In fact, there is a pending case before the Georgia Supreme Court regarding the priority of various interested parties to the excess proceeds from tax sales (DLT List v M7VEN).  This is related to the discussion of "super liens" earlier in this thread.

To your concerns about the rights of competing liens, my read of the statutes and case law indicates that any liens (other than IRS liens) that existed prior to the date of a tax sale are extinguished when barment of the right of redemption is completed (see National Tax Funding v Harpagon).  Once a tax sale happens, the only remedies available to competing lienholders (including the County and City) are to claim the excess funds from the tax sale or to redeem the tax deed from the purchaser. 

So I disagree with your assertion that pre-existing lienholders (e.g., the owner of a tax lien from 2014 in your example of a 2017 tax sale) can sell the property on the courthouse steps after a tax deed has been sold.

I am not a lawyer, and this is not advice.

@Leon Lee  Welcome.  Here are my thoughts on your 3 questions.

1) It's not the total hours that will be the problem, it's the unpredictability.  If your full time job is not flexible (e.g., you have to have your butt in the seat from 9-5, M-F) it will be tough.  If you have the kind of job where you can step out for a couple hours you can make it work.

2) Your numbers are in the ballpark, but you will likely find that if you can buy a house for $30k it will need more than $20k of work.  Also you will need to be able fund the full amount (purchase and rehab) in cash until you refinance.  You could get hard money but then most of the value you create will go to the lender instead of you.  

There are reasons why the different neighborhoods are priced so differently.  Each has its own set of risk/reward trade-offs.  As a first step, visit these neighborhoods, get out of your car, spend some time walking around, and see how you feel.  This will also give you a sense for which blocks are better or worse, which is really important in lower-income areas.  @Dan Mason I think Leon is talking about the Pittsburgh neighborhood in Atlanta, not Pittsburgh, Pennsylvania.

3) In addition to the inherent risks of real estate investing, in lower-income areas of Atlanta you will face increased risk of theft and vandalism (e.g., AC units stolen, pipes and wiring ripped out, window broken, door kicked in), significantly more challenging tenants, and neighbors whose actions reduce your property value (e.g., building code violations, drug activity, squatters, loud music, loitering, littering).

@Megan Y. unless you live with relatives, you are inevitably going to bear a cost of housing for yourself whether it is rent, interest, or opportunity cost of not renting a property you own outright.  With that in mind I'm not persuaded that renting is wasting money.

If you want to live in Buckhead (which I understand, because I live in Buckhead) you can rent an apartment here.  If you want to invest in real estate, you can do that in a less expensive neighborhood where the economics work for a rental property.  Under current market conditions, that isn't Buckhead.

You are wise to prioritize having a short commute.  That is critical to quality of life in Atlanta.  Don't compromise on where you want to live, but do separate your lifestyle decisions from your investment decisions.

@Megan Y.  I'm looking out my office window and I see lots of cranes busily assembling thousands of units of new multi-family housing in Buckhead and Midtown.  Your plan is fine for putting a roof over your head but in this market I wouldn't buy a condo in Atlanta as an investment.  If you won't be satisfied with living in a condo long term, I'd say you are better off renting.  

I'm not saying I have a crystal ball that can see the future, but the coming increase in multi-family supply is a sure thing - it's already being built.

@Marcus Guidry The market for small multi-family is a bit strange right now in Atlanta neighborhoods that are primarily owner-occupied (like the two neighborhoods you mentioned).  On the one hand, a duplex will probably sell at a discount to a comparably sized single family home.  On the other hand, the discount won't be big enough to make the duplex work as a stand alone rental.  

Example:  There was a perfectly serviceable duplex on my street that recently sold for $460,000.  Probably each side rented for $1,500 max.  The buyer tore down the duplex and is building a single family home that will probably trade for $1.3M.

@Marcus Guidry If you are going to live there yourself, both are good neighborhoods and you'll know by instinct which you prefer upon visiting.  If you are looking for rentals look elsewhere; prices in these neighborhoods are driven by owner occupants.  As usual @Michaela G. is on point.  In Cabbagetown your shotgun house may be inches away from your neighbor's.  This could be a pro or a con depending on what your are looking for in a community.  Grant Park is a more traditional layout with larger lots and bigger houses. 

@Joe B. I was thinking of minimizing income taxes if you ever sell the property but minimizing property tax will be more important if you continue to hold it.

Implied in Deanna's comment above is that control is not the same as ownership.  If you were appointed the trustee but not the beneficiary of the trust, you may be able to have the best of both.

Again, get professional advice.

@Joe B. You should listen to the advice of your CPA and lawyer.

With the caveat that I am neither, based on the limited information you provided, it may be better for you to inherit the property when one of your parents dies.  This is because your basis in the property will be "stepped up" to fair market value.  If they gift it to you now, their basis will carry over to you (and if they bought the property a long time go, their basis could be really low).  This only matters if you someday sell the property (because you may owe taxes on the "gain," i.e., sale price minus basis).  If you are going to own it until you die, your basis doesn't matter and you might as well have them gift it to you now.

If your parents are wealthy or the property is worth more than $5 million, then the trade-offs are more complicated due to estate tax and gift tax considerations.

@Jabriel Porter I am not a lawyer but here is my understanding.  Deeds need to be notarized in Georgia.  Real estate contracts do not.  Your wholesaler friend is likely thinking that his contracts are more likely to hold up in court if he has them notarized.  This could be true to the extent the counterpart claimed that either 1) she did not actually sign the contract or 2) she was unaware of what she was signing.  When you use a notary they confirm the identity of the signers (usually by checking ID) and verbally confirm the parties understand what they are signing.

However, I'd be asking the question of why your wholesaler friend is worried about having to defend his contracts in court.  A deal should be a win-win for both parties.  Notarizing will not do anything to protect an unscrupulous wholesaler if a judge sees the contract as being unfair.

@John Draper Will you be buying real estate in Alabama? If so, form your LLC in Alabama. If you are going to operate in multiple states it will be more complicated.