All Forum Posts by: Wayne Igo

Go it! Thanks Steve

Recently, an investor in Texas I believe had developed an excellent Excel doc for analyzing multi-family properties.  The name of the spread sheed was "Apartment Analysis".  The discussion thread was also quite good.  The spread sheet was downloadable.  If anyone has the link to this discussion or the spread sheet please let me know.  Thanks!

Wayne

I know that the parameters of any partnership deal basically boils down to what all partners will agree to.  That said, there are guidelines and "best practices" in the RE investment community.  Consider this basic scenario and followup question:

I want to purchase a property by borrowing 80% of the cost and have a partner/investor cover the remaining 20%.  What would be a fair way to share equity and cash flow?

Recently I have been doing some research into property tax sales.  It's complex and there are about 3100 taxing units (counties) in the US, all with their own set of laws, rates and auction styles and rules.  The two basic types are Deeds and Liens.  With deeds you are buying the house and with liens you have an interest bearing certificate.   There is also a redemption period where the owner/previous owner has the right to pay back taxes plus penalties, fees and interest within a certain time period which varies by state/county.

I think there is money to be made but here are some problems I see:

1. Better know what the underlying value of the property is.

2. Better know the rules and conditions for the taxing unit. 

3. Better know the odds of redemption and owning property.

4. Redemption (cash to you) may not happen for as long as two years.

5. Returns are from about 12% to 25% depending on the county.

I've over analyzed the tax deed/lien business and still not sure if this is worth going after or now.  I'm also, looking at Tax Deed Sales on properties that have a low liklihood of redemption by the owner providing me the opportunity of gettting the property for a very low price. The property is then made ready and rented or sold.

Has anyone else been seriously active in the tax sale business?  What has been your experience and any other comments would be appreciated.

Thanks

Question: Can I form an LLC in Texas, transfer the title to my personal home, mortgage in my name, to the LLC and let depreciation and expenses flow through to me personally? In other words, rent the house that my LLC now owns.

A question about wholesaling.  When you get a contract on a property:

1) How far out should the closing be scheduled?

2) Specifically (esp. Texas) how can you include contingencies in the contract so that if you can't find someone to assign to you are not STUCK with obligation to buy yourself?

3) Whats to keep an investor you share the details with from just waiting until the contract is  terminated then going straight to the seller themselves?

An obvious big "gotcha" is an unexpectedly long time before a buyer comes along, taking a huge chunk from profit potential.   Initial asking price is of course a major controlling factor.  I'm looking for some techniques that have been used successfully to minimize the likelihood of this happening.  Currently, I am using sources like Zillow to simply count listings, sales and rents over various time periods (e.g. 2 months).  The idea here is to get a handle on supply and demand in the target area over the past x months.  Any input would be much appreciated.  I tend to work top-down.  I don't won't to spend time in an area finding that great buy that won't move because of economic or other factors.  Too bad we don't have a resource that provides a macro economic comparison or ranking by zip code on such things as house sale turn-over, prices, trends, job growth, population growth and inventory levels for things like lots, new homes, etc.

There is a ton of martial out there and its hard to know what is good and what what is not.   So, Brian thanks for the recommendation on J. Scott book. I've been reading a lot of Steve Berges that has helped.

At a foreclosure public auction there is usually an opening bid. Lets suppose a property is going up for auction at a starting bid of $87000. Repair costs are say mostly cosmetic at $3500 and the ARV is $160,000.00. Clearly, there is a deal here but only if the auction price is not too high.

My question is, on average, how much above the opening bid (if there is one) on a percentage basis, can one expect the winning bid to be.  I know it "depends".  But I would really appreciate any comments from those with auction experience.

Thanks

Thanks for your comments.  After talking with others, you are dead on that houses are being purchased buy live-ins and investors not speculators.  The current hot market can't last forever which means that indeed "the big party is mostly over" for the speculators.  The economy has some uncertainties and that is the dominant factor in real estate.  That said, I am expecting the market to cool somewhat and come back in to a historical balance regarding supply and demand.  There is always money to be made in any market, you just have to use the right model with the right timing and factor in historical information and trends, especially if you are buy and hold.