All Forum Posts by: Denise Evans

In my experience, banks generally accept offers in the range of 15% to 20% less than fair market value, as determined by the appraisal they order. It is important to be present when the appraiser inspects the property, so you can point out all property defects and obsolescence that will affect value. You should also present the appraiser with at least 6 comparable recent sales and 6 current competing properties on the market, with explanations regarding how the subject property is similar to, or differs from, those properties.  Banks use appraisal management companies for appraisals, which means an average cost of $75 and a turnaround time of 3-5 business days. That's a lot of pressure on an inexperienced appraiser (who else will work for $75?) so any resources you can provide will probably be assimilated into the final appraisal. The fact that you are a real estate agent makes no difference except for payment of a real estate commission. Some will allow you to be paid all or part of the commission at closing. Most will not. You might want to get a friend to be the listing agent.  Some banks require an anit-flipping affidavit saying you will not flip within 90 days. Most do not. Most simply require an arms length affidavit.  I would not be afraid to sign a purchase contract for $200,000 and see if you can get it there. Earnest money can be as low as $500. The seller usually doesn't care at this point, and the bank has no dog in that fight. Do not trust the seller to fill out short sale paperwork properly. Get an authorization letter and YOU fill it out and then get his signature. Many short sales fail because of incomplete or inaccurate paperwork, not the numbers.  If the owner is H&W but only H signed the note, only H assets and income go on the forms. But, complete family living expenses go on there, not just half.  Good luck!

Sorry, I had company at the door and had to cut my prior reply short. Have you talked to the neighbors? What do they know about the decedent and any possible relatives?  Is the mail being forwarded some place else? Was there an obituary notice? Did it list surviving relatives or pallbearers? Was there a spouse at one time?  Predeceased or divorced?  If divorced, can that person provide any info?    What doctor signed the death certificate? Was it a family doctor?  If you can find someone to sign a sales contract, you can probably get the foreclosure postponed to get a short sale approved.

Track down the heirs and do a short sale. Foreclosures are frequently postponed.

Evictions can be accomplished in Alabama as quickly as 30 days if you use a private process server and employ nail and mail service.  Uncontested  (default) evictions generally cost $500 to $750 in legal fees and a filing fee around $200. Contact me off-forum for attorney recommendation.

If loan is owned by a securitized trust, it is highly unlikely they will exercise the due on sale clause.

Make sure you understand the passive activity loss limitation rules and the at risk loss rules, which could prevent you from sheltering ordinary income from paper losses on your investments. Do you already know about this, or do you want me to explain?

Also, don't forget about Section 179 deductions, which lets you claim a business expense deduction for 100% of the purchase price of equipment used in your business, all in the year of acquiistion, up to certain dollar limits per year.  Also limits on vehicles. Most vehicles top out at a $25,000 deduction, but some (usually trucks with full size beds) do not have that limit.

@Brenna Sullivan, just because someone makes their living as a property manager does not mean they know they law. Don't be intimidated and think that he perhaps knows something you do not know.  I recently attended a seminar by a property manager (because I like to check out my seminar competition) with over 30 years of experience, whose brother is an attorney and gave him advice on property management, and a LOT of what he was telling people was absolutely wrong from a legal standpoint. I was appalled.  

I agree with @Brad Sanford that, if possible, your mom should pay the money in order to protect her credit. She should accompany the check with a letter saying that payment is with full reservation of rights and not an accord and satisfaction.

There is a very active legal services group in Madison County. I do not know their official  name or contact number, but you can probably find them on Google, or by asking some of the clerks at the court house. Your mother should not wait to be sued, which will hurt her credit. That trickles down to also cause increased auto insurance premiums, homeowners insurance rates, and credit card interest rates.

That being said, have you read the entire lease very carefully? There might have been an automatic renewal clause unless certain notice was given. Automatic renewal clauses are enforceable in Alabama.  If her lease automatically renewed for another year, then the landlord might be doing her a favor by letting her cancel on 60 days notice, instead of holding her to the entire renewal term.  Or, her original lease term several years ago might have renewed on a month to month basis, with a requirement for 60 days notice to terminate.  It all goes back to the lease.

If your ultimate plan is to build a portfolio of income producing properties, then make sure you write your business plan accordingly so you don't run into IRS problems. 

Flippers are considered "dealers" by the IRS and are treated the same as WalMart. They have an inventory of products they buy and sell.  Tax treatment advantages for investors, such as long term capital gains tax rates, depreciation, 1031 exchanges, seller-financing advantages, etc. are not available to flippers.  Flippers must pay ordinary income taxes on their profits and must also pay self employment income on flip profits. 

On the other hand, if you have some other source of income to pay ordinary living expenses, and are truly flipping largely to build up cash for buy and hold investments, then you can treat your property transactions as investments.  It is critically important to have (1) a business plan that says that; (2) some source of other income to support yourself; and (3) the dedication to stick to your plan.  Fine-tuning changes are okay, but you can't just write a plan and then ignore it, and expect the IRS to be fooled. 

If you do some flips to generate living expenses and other flips to generate down payment and rehab money, then you might want to segregate those transactions into two different LLCs.

Finally, it's not all bad to be a flipper. Flippers get to deduct mileage and other business expenses that investors must capitalize.

Exactly, Hollie. The owner is your tenant, and the person occupying the property is the subtenant. You are legally in possession.

This is a good situation for a TRUE sublease. Most times, when a landlord has a tenant who wishes to move out, and that tenants finds a replacement, the parties call it a sublease. It's not, really.  It's either an assignment, in which the old tenant assigns all of his rights to the new tenant (and the landlord approves it) or it's a cancellation of the old lease and replacement with a new lease.

In a true sublease, Landlord rents the property to Tenant A.  Tenant A then rents the property to Tenant A is the landlord for Tenant B, and owes all of the landlording obligations.   If the toilet gets clogged up, Tenant A is supposed to get the phone call in the middle of the night.  This is the situation you will have if you sign a lease with the taxpayer.

I don't see anything indicating that a due on sale clause is relevant.  Maybe I'm wrong. Did the original note maker and property owner sell the property?  Or maybe Brian meant to say a power of sale clause, but auto correct changed it to due on sale.

Judicial foreclosures in Alabama are usually done only if the note/mortgage holder believes there will eventually be litigation. Such as, the borrower has threatened to sue, or maybe there is a question about priorities among competing mortgages. In that case, a mortgage holder will file a judicial foreclosure action in order to just get it all out in the open at once and let a judge rule.

Most foreclosures in Alabama are non-judicial. If the mortgage contains a power of sale, then you can do a non-judicial foreclosure.  I would recommend hiring someone in Sirote's foreclosure department to handle it for you. They are very efficient and knowledgeable.

Timing will depend on the note and the mortgage, which might include requirements regarding notice and opportunity to cure.

Once past those things and ready to foreclose, here are the two statutes relevant to timing.  Foreclosures are very technical in their requirements, and doing something wrong can have very expensive consequences for you.  Please hire a VERY experienced attorney to handle this. 

Notice of said sale shall be given in the county where said land is located.

Notice of all sales under this article shall be given by publication once a week for three successive weeks in a newspaper published in the county or counties in which such land is located. If there is land under the mortgage in more than one county the publication is to be made in all counties where the land is located. The notice of sale must give the time, place and terms of said sale, together with a description of the property.

If no newspaper is published in the county where the lands are located, the notice shall be placed in a newspaper published in an adjoining county. The notice shall be published in said adjoining county for three successive weeks.

(a) When the notice is required to be given for a specified number of weeks, it must be given by consecutive weekly insertions for the number of weeks so specified. When the notice is of a proceeding to be had or of an act to be done on a specified day:

(1) If the publication is for one week, the insertion must be not less than six days before such day;

(2) If for two weeks, the first insertion must be at least 12 days before such day;

(3) If for three weeks, the first insertion must be at least 18 days before such day;

(4) If for four weeks, the first insertion must be at least 24 days before such day;

(5) If for five weeks, the first insertion must be at least 30 days before such day;

(6) If for six weeks, the first insertion must be at least 36 days before such day; and

(7) So on at the same rate of increase, the time to be computed as provided in Section 1-1-4.

(b) When the time is specified in days, two weeks' notice is equal to 15 days' notice; three weeks to 20 days; four weeks to 30 days; and six weeks to 40 days.

(c) A newspaper publishing a notice shall also place the notice on an Internet website operated by the newspaper, if the newspaper publishes a website, and on a statewide website established and maintained by an entity having the capacity and ability to receive and upload legal notices from the majority of newspapers in this state as a repository for the notices. Posting on the Internet shall begin on the first day of insertion and run continuously until the expiration of the specified time. All newspaper notices required pursuant to this section to be placed on the Internet shall remain valid for all purposes, and the legality of the newspaper publication shall not be affected by the failure of the newspaper for any reason to upload legal notice publications to a statewide website or to another Internet website or to accurately post the notice publication on any website.