All Forum Posts by: Jimmy H.

Brandon, although it's been more than 2.5 years since your initial post, I'd like to hear about whether or not you ever pursued your timber investment ideas any further and why.

This is something I have looked into a bit lately here in my area. I would think the economy has brought land prices down substantially, I have no idea what the returns are like and have no idea about valuing trees so I would likely have to pay a "timber cruiser".

I agree with Brandon that I don't think the big corporate guys are as active in the 50-100 acre parcels, and I think this may pose as a niche that the big boys are to big to deal in.

It is nice to have agood rule of thumb to use when screening properties, so that I don't need to pay a timber cruiser to look at 5-10 different properties. P NW suggests to call your local mill and get rates, estimate board feet on a particular parcel, and budget 50% of the worth for cutting and transportation costs, is this generally accurate? Any other rules of thumb or easy ways to help me screen properties?

The Kilz should do the trick but I'd definitely check to make sure that the problem that caused the stain has been mitigated.

Max, I appreciate the recommendation, but the primary reason I am asking such a question in this forum is to avoid the costs associated with seeking proffesional advice and instead seeking recommendations of experienced inviduals who probably sought such advice themselves.

When I goto actually set everything up I will seek the advice of a CPA and have a competent attorney draw everything up, but I want to avoid as much of that cost as possible by being well educated prior to seeking such proffesional (and expensive) services.

So the general consensus is to form an entity in the state you are investing in to give you full legal rights.

Obviously you will have to pay property taxes in the state in which you are investing. But income tax is not as clear to me, if your LLC is formed in the state in which you are investing you will have to pay taxes in that state as well as your own home state? How exactly does this work, the income from the LLC rolls onto your personal income tax return - do you have to pay state tax for two states. Does this sort of investing therefore increase your effective income tax rate?

What other considerations are there besides income tax and legal rights?

For those experienced in purchasing tax liens, I am interested in making a definitive thread that defines that steps to take to prepare for and purchase tax liens.

In my state the sales are in August, in June our state SOS puts out the sale dates for each county and I can look up property adresses and amounts owed for each property.

Where do I start in terms of due diligence, obviously I want to go take a look at the property, and in my case I was thinking of keeping an eye on vacated properties as my main intention with tax lien investments would be to acquire the property (although I will take a 12% yield even if I don't end up foreclosing and taking possession).

What exactly do I look for besides the condition and location of the property, etc. What do the big tax lien funds look for? - it seems that they go in and buy nearly everything and set up a website so owners can make credit card payments online. Their strategy is to buy a bunch of them, set up for easy payment, collect their 12% and then foreclose on the 1% of properties and take possession when they can. But even then there are some liens that don't get purchased and it makes me curious as to why. the only issue i can imagine is senior liens like an IRS or other federal liens exist.

What is senior besides federal, and do all junior liens (including mortgages) get completely wiped clean?

So is the main premise then that you look for senior liens, understand the condition of the property, and then it is simply a matter of how much you want to pay at auction? It seems to simple - if liens are selling for $3,500 then they'd almost all seem like a good deal. What are the other main concerns - if you aware of condition of property and senior liens?

My state is a lien state, not a deed state, which means you are buying only the lien - which typically sells for less than $5,000. Let's say for instances that I took $50,000 and bought at least 10 liens on properties that I was comfortable with property condition and there were no senior liens - what other concerns should I have. It seems ot me that i'd get a good return on my 50k and a chance to foreclose at an incredibly low price.

Investing in liens seems to be a very profitable sector of REI, and I assume it is because of the barriers to entry - that being knowledge and understanding what you are doing. It is said that you can make a lot of money in liens if you know what you're doing, but can get burned if don't.
In my research I am still not certain that I know enough not to get burned, what should I do to feel fully prepared and confident to invest in liens in my state come August '11?

Thanks for the responses.

Yes you are correct, I was under the impression at first glance that these tenants were triple-net, they are not.

Are the returns on offices generally lower? I have seen some info on this but I can't imagine the returns being much more than 1-2% CAP lower. And you would think this is only due to a lower risk factor.

Are there any good rules of thumb for office screening. Don, you mentioned 50% expenses, does that 50% rule generally apply just as well to office investing. How about 2% or others?

Do you think a wave of office foreclosures is imminent in the next couple of years, bringing prices down and CAP's up?

Warren,

Who is currently managing your properties? Are they all in different areas? Do you have one area with a trustworthy friend/family or other individual that you would be inclined to invest in?

I would likely pick one spot to invest, sell your other properties and consolidate into one area - it's hard enough finding one good quality and trustworthy property manager, let alone multiple ones in different areas. Pick an area and consolidate your investments, you can find decent cash flow and decent areas with positive LT economic trends in almost any region of the coutnry, so take your pick

No one on BP interest in offices?

Looking to potentially invest in other states for commercial REI. I was wondering about the proper entity structure and potential tax or other implications of doing so. Is this a situation where I could incorporate as a Delaware LLC or something, or should I keep the LLC filed in my home state, or file one in each state in which I plan to invest. What other considerations am I overlooking?

Or for example, if I plan to seek financing from a local bank in the area of investment as opposed to seeking financing in my home state, with this affect deal structure. I would assume it would be easier to get financing in the state in which I will be investing, and if I am incorporated in my home state what complications might this cause?

Haven't been able to find any threads dedicated to offices and i'm sure some of you have experience investing in them. I am interested in commercial RE - even though the talking heads have said "commercial is the next shoe to drop" I don't think the residential shoe has fully dropped for that matter.

I am interested in a class B office space just off the main artery (road) in town. It is on a corner lot, plenty of parking, three story - no office condo crap they've been developing. Office rental rates in my town are $10/sqft for the loweliest dinkiest spot you can find and $17+ for Class A new construction. The problem is obivously that small business is hurting, so even some Class space downtown is edging down below $15 towards $12 in order to fill vacancies. My thought is that I could get $12/sgft for this spot and even being super conservative in my estimates, I could take $10/sqft and still cash flow.

Building is three stories with about 4 suites per floor (can be divded up different ways), and a total of 25,000+ sqft of rentable space. asking price is $2,100,000 and it undoubtedly needs sprucing up and painting, etc. but not in bad shape - just a bit of cosmetics. I'm looking at around $10,000 per month debt service on a 30 year am and $12,000 debt service on a 20 year am. even at a conervative $10/sqft my revenue is over $20,000 per month, and probably close to $10,000 cahs flow after debt service (hoping i can get a 30 year am). It is currently 100% occupied.

For you experienced investors out there, what am I missing, deal or no deal?