All Forum Posts by: Jimmy H.

Thanks for the responses, but you essentially both gave me different answers - that is my confusion - do you get the property free and clear or does the junior lien holder have some remedies to seek the leftover equity?

And yes I plan on buying in Kentucky. I have found state websites with many details, but can't seem to find the nitty gritty anywhere.

No websites, books, BPers, state info, etc. will give me the specific answers I want and I am frankly quite frustrated by it. I do not want to pay a lawyer for his time, and if I do I have trouble finding a tax lien lawyer.

For starters, what type of law practice involves tax liens? Maybe i can start looking for a lawyer that way

recommendations?

Let me start by answering my own question to the best of my ability, and then perhaps one would be inclined to correct and make additions to my checklist.

1) Get list of delinquent taxes in your county

2) go and inspect condition, repairs, vacant or not, ARV, etc.

3)For those properties you're interested in search with the local authorities for building violations and mandates, and then perform a title search to see the current liens.

3a) Perhaps perform a title search and building ordinances the week of the sale as well to make sure nothing new has been filed.

4)Go to the auction and buy the liens at a price which you ar willing to pay

What am I missing?

It is my understanding that junior lien holders essentially get wiped out if the owner of a tax liens forecloses on a property.

Example: House worth 100k with a 1st mortgage of 75k, I buy the property tax lien for 5k, hold it for a year (legal holding period before you can foreclose in my state), and when I foreclose the 75k mortgage is wiped clean and I own the property free and clear?

I guess the borrower still owes 75k but it is not longer collteralized by the property?

Is this how it owrks, that all JUNIOR lien holders get completely wiped out and you own a property free and clear for 5k?

Lastly, what lien are senior to property tax liens? IRS and what else? Is it just any federal lien?

-It seems a bit odd to me that a 5k lien wipes out a 75k mortgage. It seems more reasonable that you would foreclose and be the first to collect on your money, then the mortgage holder could seek repayment from whatever equity is left.

How does this work?

Yes this is a fixed NOO product i'm looking for. I like the idea of hedging and would like to find somewhere to get more info.

Interest rates must go up at some point, the question is when and how fast.

I understand the common thought is that commercial is the "next shoe to drop" and that you will be able to find better deals in the next 2 years, and I agree. That being said - A deal is a deal and if I can get LT fixed commercial NOO financing then I would be buying up some deals right now as well.

I know many on BP have voiced concerns over deflation and/or eventual "hyperinflation". I myself am more worried about stagflation.

I am looking at commercial MH investment properties, one 6 unit and one 8 unit. They are cash flow positive but not outstanding, as the units are in pretty nice areas. My concern is the typical 5 year balloon.

It is always tough to predict interest rates 5 or 10 years out, especially in this economy. Maybe you could argue we'll stay in this low rate environment for the next 5 years, but in 10 - with all of the money thats been pumped into the system and the government's apparent goal of devaluing the dollar I think interest rates will begin upwards sooner and more briskly than you might imagine (especially considering the multi decade lows they are at now). My concern is that these properties will be at even or negative cash flow in 5 or 10 years. Which with my salary I can handle....But I don't want to pay out of pocket I want to stay cash flow positive. My question is: Is there any way to get around this.

Is there any way to get fixed long term financing on such investments,? Or in this environment is the best answer just to buy 1-4 family units and lock in a low 30 year fixed. 1-4's are great but I really like this 6 fam and 8 fam i'm analyzing.

What are your pedictions for interest rates?

If you're predicting a rise are you shying away from commercial investments and buying only 1-4?

And, most importantly, is there anyway around this dilemma?

Thoughts or suggestions?

No one on BP willing to help make a guide/checklist for preparing for tax liens sales?

Johnny,

Thanks for the response. Yes, that's the idea.
I'm not experienced with MH investment; But, it makes since that doing lonnie deals in parks you don't own is the norm then. Thanks for confirming my thoughts.

I say take the bus tour with the realtor and listen and ask questions, then take a rental car into the area and get the real lowdown afterwards. Can't hurt to do both, point being is don't be sold on realtor hype - but the local realtors no doub thave great knowledge.

Perhaps do it in the reverse order so that you have more petinent local questions to ask the realtor on the bus tour.

Local REIA is a good suggestion as well.

If by emerging you mean not in your traditional big metro hubs and areas that are growing in jobs and population, I tend to think and hear alot about Missouri, Colorado, Alabama, the Carolinas, and of course Texas (but when so many people are touting texas it makes me wonder if prices may be a bit inflated - perhaps it's just BPers that are privvy to the "Texas Train")

Nothing like bringing life to an old thread..

I had a thought about doing lonnie deals in mobile home parks that you don't own.

My idea is this: there are plenty of old mobile homes around for cheap and ones that can be fixed up and "flipped" for relatively small amounts, there is a strong market of people who want to live in parks and people who can't get financing but want to "own" their own home, and owning and operating a MH park has a variety of maintenance issues and costs. Top that off with the fact that returns on lonnie's can be high and require relatively low startup capital - and i'd say it always feels nice to get to sell one home multiple times (if you get a defaulter).

I was thinking that MH park owners usually have a good bit of empty pad's - already hooked up with services and ready to go. They likely will want to collect all of the pad rent they can. I would work a deal with them to move mobile homes to their park - generally fixed up and nice, and lonnie them (or basically owner finance them) to a buyer and let the buyer pay the pad rent. I was thinking you may even be able to work a deal with the park owner that you pay no rent or a very very small pad rent if the home is empty, but the eventual buyer will pay full rent to be worked out with the park owner. You can argue that you're paying to move the homes and that your interests are aligned with the owner in that you, of course, want the home to be occupied as well.

This strategy would keep you from really doing any maintenance or having any holding cost or utilities. The key to success would be in finding park owner's to deal with, and starting one home at a time and finding a cheap home or a flipper, pay a grand or so (I think this is a reasonable estimate for in-state mobile home movers) to get it moved to the park - and then lonnie it.

I'm looking for low maintenance or variable expenses with high returns

Thoughts? Anyone tried a similar strategy?

Matthew, Did you have to get the land subdivided and surveyed, or was the house already deeded with the 2 acres?

Seems like this might be the best route to acquire land. How hard would it be to get the house and a small parcel rezoned? How expensive - so that I know how much to factor into my flip costs?