All Forum Posts by: Marcello Di Gerlando

@Aaron Pfeffer I use Airdna and accept most of the data as generally reliable and useful for my area. However, I would expect this not to be the case for all areas. One thing airdna will not account for is occupancy by the owner which could be construed as revenue generating occupancy. I supplement data with my own research and also use Evolve.com.

There are lenders that will lend on rental income. I have never been down this road however, I have seen it discussed a bit on the forums so run some searches to find the pros. you may find a HML that would take a first position on you freehold property with a commercial type lone.

Comps

@Jesse Spaur same rule applies at every stage of the economic cycle...buy under the current market value and add additional value where you can. if you can hit both of those notes your risk is lowered and you may just come out on top.

I concur with  @Lee Mast . You will need to shop around for a lender to service a HELOC for an investment property or second home.

I can only speak from my experience. Securing a line of credit is cheaper than a REFI and also gives you flexibility to shop around without paying a monthly vig unless you draw. If you have a property lined up and ready to buy then a REFI may be better option. I like the LOC option for the flexibility. You can use the credit line to buy a property with cash and then refinance to a longer term fixed rate once you own the property.

...occupied houses. That is another problem you will run into buying from auctions. understand that you are buying a note on house that the previous owner could not pay. In some cases the owner or tenant ( sometime with lease that you cant break) will not leave the property and the bank can't or won't evict them. That will be your responsibility. Sorry I don't have the heart to kick mama and baby out on the street. I stay away from occupied houses if I think I have to put a poor wretch out.not my thing. others do it all the time and sleep just fine.not me.

Don't assume a special warranty deed covers you completely. Being a title expert in the auction game is the secret sauce that some folks can exploit to a profitable advantage. I though I was pretty good until I started coming across nuances that made me nervous. You will see anything from outstanding HOA fees to mechanic liens to property line violations etc etc. Getting title wrong may cost may everything. There is a reason title insurance exists. You will -not- have title insurance when you buy at auction. Two things I recommend you do to mitigate your risk . 1) Pull an O an E report from a friendly title company for each property. States have their nuances so it may be called something different in your state. these reports will also vary in price from a few dollars to $100 plus depending on your state. I spend $5 dollars each and these get expensive when running a lot of reports. Pull the reports at the last minute, no earlier than 24hrs out if you can. An O and E will show you all encumbrances, liens, owner, deeds, and all relevant data you can use to asses the note...is it in first position? what 2nds are listed?( 24hrs or less is important, because the scammers tactic is to encumber the property with a bogus lien just prior to sale...causing the winning bidder to sell to 2nd lien holder). 2) Have a Real Estate attorney read the O and E report and give you their take.expensive. You could ask the title company to have a look they may not charge you if you got it from them. You have to mitigate your title risk any way you can...even if your title is clear it may not protect you from all the other crazy...in one instance I know of an investor ending up in the hole thousands of dollars because of an outstanding water bill. water company was under no obligation to turn the water back on until the bill was paid. this did not show up as lien. You must know the nuances of the area you wish to buy in. Planning on bidding on properties 4hrs away...I would not do it personally. You could link up with a real estate agent or a bird dog in that market and cut them in. The reality is that you will lose more bids than you win if you are looking for properties with meat on the bone. you may have folks running around for you with little to show for it. I don't want to discourage you in this area i don't have experience and you may find a cracking team to work with. Understand your market. if it were me I would take the time and make the effort to go to these areas for the first few deals build a network, understand the area, culture laws etc and it will become quickly apparent if its your game.

I see similar situations come up from time to time. I can't say I have a good answer. A number of folks have approached me in the past with variations of the problem you have. I hope folks will chime in and give some proven solutions because I would like to work with other folks on deals but as of yet only worked by myself and sometimes with family. Partner splits never make sense to me in my experience so far and the last thing I want is to end up in a messy angry squabble of a deal. ( i cant think of anything worse). My rational always hinges on the fact that, if I'm carrying 100% of the risk as the 'money guy' how does a 50/50 split make sense? it doesn't. I suggest you approach this from a risk angle and create a split focused more on the risk associated with your deal you can both agree on.

@Sean Laird I have purchased several properties at live auctions so I can only speak to my own experiences. I used to track the online auctions like auction.com and simply gave up. Fees, perceived shenanigans and overbidding made it impossible to find a deal in my neck of the woods. Live auctions are also full of pitfalls that you need to understand very clearly before you ever even think about bidding. The biggest newbie live auction mistake is bidding on a second or third place lien instead of the first position note which gives you the deed of trust.( no one will tell you its a lien you are bidding on and it may not be apparent from the listing) this mistake will leave you holding a very expensive worthless piece of paper. You really need to understand how titles are held and owner and encumbrance reports should be pulled and read. saying all of that may not even apply in your situation because live auctions vary from state to state. I can only speak to Colorado. Online auctions and live auctions will not give you permission to trespass (because the bank may not own the property or its contents they simply hold the note)...however no one has stopped me yet. I will always check on the property before I bid; always...I say again, always. If the property looks occupied I knock on the door and reassess. If its not occupied, I walk the perimeter, peak in every window, and talk with the neighbors about the property and former occupants. (this is key...neighbors always spill the beans on drug dens,ugly divorces, suicides etc) if I can get in I will. I will never force my way in...but if a front/back/garage is open I will do a quick once over. I'm not suggesting you break the law. If I suspect a flop/meth house and its always very apparent its a no brainier...leave it and don't bid. mitigating meth will break anyone. I will also have a good idea about rehab costs. The big ticket items will reveal themselves. To be frank auctions are challenging for many many reasons; I would not recommend them unless you sit in on a whole bunch of them, find a mentor familiar with your local laws and procedures and do a bunch of dry runs. Some of the screwy things you will find are : Bidding against corporate money looking for a 4% return (my guess is your are looking for better than 15%...you can never win this fight), funny money from overseas not looking for - any- return (just a place to park their dirty CASH. Again, you will lose the bidding war every time) or folks with too much money and not enough sense to realize they are over bidding (frustrating as hell), also fake 2nd liens used to a problem here were the winning bidder would end up having to sell to fraudsters days later...by law... Its a tough racket, good luck out there.