All Forum Posts by: Matt Shields

 I do my own research. I used to do a lot of land sales, so I have experience researching parcels. 

Mike, I don't know anything about West Virgina tax liens, but 12% interest with an 18-month redemption sounds pretty good. Here in Arizona, it's a reverse auction that starts at 16% and can be bid down to 0% with a 3 year period before foreclosure. 

Keep in mind that my experience is with AZ. My strategy is I buy for the return of interest not expecting to get a property. It is unlikely to foreclose on a property through a tax lien, I just look at it as a rare bonus. Many amateurs bid a lien down to 0% thinking they are going to pick up that multi-million dollar home for $10,000. Unfortunately, they don't realize that many people purposely let properties go to the tax lien auction because they get the equivalent of a low or interest-free loan and will pay it off before the foreclosure period ends.

Many people also make the mistake of buying worthless junk at tax lien sales, especially land. Often times the owners let the taxes go because it can't be built on and they don't care if someone forecloses on it. Some examples: Floodway or no legal access properties, toxic dump sites, and HOA common areas. There is a recent funny situation in California where someone purchased a private driveway to over thirty multi-million dollar homes and is going to charge them for parking. I think I would install a toll gate! :) http://www.latimes.com/local/lanow/la-me-ln-presidio-terrace-purchase-sf-20170808-story.html

I would start small and not throw your whole five grand in at once. Learn how the process works, and as you get experience then start investing more. 

Good luck.

 Here in the valley, rental rates began climbing soon after the crash began and have been increasing since, although they seem to be flattening out in the last couple months. 

I'll add that it wasn't just that people couldn't pay, or were never able to pay, some wouldn't pay. Many people had negative equity and walked away from their mortgage even though they could afford to pay it. (Strategic Foreclosure) The positive for landlords was that many of the people who were homeowners moved to the rental market driving up rent prices. The downside was the loss of value of property, but as long as they didn't need to sell they were ok, and property values have mostly come back now. The people who made fortunes were the ones who bought cheap homes after the crash with rising values and rents.

From my earlier post:

I was at ground zero during the crash working in real estate. While there were many things that contributed to the market downturn, two problems were the main cause, and neither has been fixed. First no money down loans. Despite what the government and pundits tell you they never went away. For example, an FHA requires only 3.5% down, but the dirty little secret is that buyers can receive up to 6% in seller concessions, and add to that another 4.5% from down payment assistance programs.

The second is non-recourse loans required by many states including here in Arizona. When you combine homeowners with no equity and a loan that they can walk away from without a possibility of being sued by the lender, it is a recipe for disaster. What began as a small downturn in the housing market became a crisis because homeowners with no equity and nothing to lose began walking away from their mortgages, further driving down the market. Many didn't even try to short sale because it was of little benefit to them, and this resulted in entire neighborhoods being nearly vacant. These homes then became the targets of thieves and vandals lowering values to a fraction of their original worth.

It depends. If he is waiting to see if it turns out to be a good investment, then he will never buy anything. Like in the 90''s waiting to see if Apple stock was a good purchase. Turns out it was but it you missed the enormous gains, and it may not be a good investment anynore. On the other hand if like me he is waiting to see what happens with this market after a large increase in values he may have a point. 

"Another potential scenario, what happens with the same situation, except I am in a dual agency with a Buyer as a client?"

In dual agency, you must represent both sides fairly. How can you do this if you're one of the sides? Also, if you are representing the buyer, you must put their interest above yours. Not ethical.

Disclosure

I don't know if it would cover floods. Probably good to look at the policy if your in a hurricane prone area. Even so, the problem is there is nothing to rent.

I read an interesting article about the conflict between landlords and tenants in Texas. Landlords are wanting to end leases so they can strip out all of the water damaged materials before mold sets in, but the tenants are refusing to leave because they have no place to go.

During the boom, I was involved with splits. Here in Arizona, it was common to buy 5 acres with one-acre zoning, usually split it into 4 parcels because most 5 divisions would leave you just short of an acre. For legal reasons, most investors did not divide more than 5 times. Then they would put in a road, shared well, road/well agreements, and deed restrictions. They were sold to people wanting to build custom homes, and small home builders constructing spec homes. It is a successful strategy, but just about everything has now been split up in the desirable areas. It is very important to find an experienced land agent, attorney, and surveyor. Subdividing raw land is not for the inexperienced, you will need to know about subdivision laws, wells if applicable, perk tests if applicable, utility installation, zoning, deed restrictions, flood zones, phase 1/2 environmental tests, legal access, and I'm probably forgetting a couple. 

Good luck.

I don't recommend it unless you are experienced in construction and have a general contractor that you really trust. You will soon learn that contractors are the worst part of this business, and if you are not on top of them every day you will end up with a disaster. I'm a full-time investor and wouldn't do a flip 2.5 hours away unless I was going to stay at the property during construction. 

Disclosure