All Forum Posts by: Matthew Newcomer

Hey BP Community,

I've done a good amount of research and reading on this topic recently as I just received a massive list of tax sale properties in my hometown of Baltimore and found a few that I'm interested in bidding on.  My biggest question is, assuming I would win the auction for a property and own the tax lien, and assuming the owner doesn't pay the lien off before the end of the redemption period and I begin foreclosure proceedings, what would happen to any existing mortgage on the property?  If I were to go through the entire process and foreclose on the property, would I then assume any existing mortgage or would I take title to the property free and clear while the owner has to deal with the bank / mortgage?

My thought process is that if there were a mortgage on the property, the bank would pony up the cash to pay off the lien before it ever got that far (and then try to recoup that from the borrower later) but wanted to confirm if my logic is correct as it doesn't seem that anyone has written about the late stages of this process, only the auction and redemption period.  Thanks!

@Sam Leon - I'm writing to ask how this was ever resolved?  I am analyzing a foreclosure now that is owned by Citibank.  The currently outstanding water bill is outrageous - in the many thousands of dollars - and I'm doing some due diligence on BP to see who has had experience in this arena.  My thought is that the current owner has to pay the bill in full at / before settlement and it should never be my responsibility if I purchase the property.  I'm wondering how your situation turned out?  Thanks so much

Andrew Johnson I hadn't offered to sign one yet. We just walked the property on Monday and got the limited documentation today back from the agent. I agree that only giving up one month of income and expenses is unacceptable, especially this time of year. I will press them for additional months and also for their financial statements for FY 2016 to get a better picture of what's going on. Most of the tenants have lived in the building for a number of years according to the rent roll that we have. Only one or two moved in during 2016 and only one so far in 2017.

Thanks for the great information, everyone. We've done a couple of smaller multi-family deals so far but this would be my first property of this size. Need to brush up on my reading and research. Really appreciate the help!

Hey BP community.  I'm doing my due diligence on a 9-unit building in Baltimore, MD and one of the items we asked for from the listing agent is the current leases for the tenants living in the building today.  He replied that this is something typically given AFTER an offer is accepted, which is just about the biggest pile of BS I can think of.  Wanted to get your thoughts on whether or not I'm off base.

We did also ask for 1 year of rent rolls and expenses and they only gave us April 2017.  Not much to work with but we can see how much rent they're charging for each unit on the rent roll and who is behind on rent.  That's a start but not really the full picture that we asked for.  

Any thoughts?  Thanks!

The only time I've ever seen something like this where no changes are allowed after the sale is when there is an easement on the recorded title of the property, which could be perpetual based on the type, such as a conservation easement.  But in this case, after the seller is no longer the owner of record and no such agreement exists on paper or on the contract of sale, he doesn't have any say in the matter.  As people have stated above, this isn't a legal opinion, just my thoughts / experience.  Good luck!

@Michael Smith - thank you so much for this in-depth response.  This is the best explanation I've seen and answers a nagging question I've had for a long time re: why principal payments are not included on the income statement.  Thanks again!

@Steve Babiak  @Wayne Brooks

Thank you both so much for your replies.  I reached out to @Tim Norris' insurance company and waiting to hear back from them.

It's frustrating - I've been doing so much reading and research leading up to this first rehab and even with everything I had done, I knew I was going to learn a lot "on the ground" so to speak, but the issues that have been popping up, mainly due to advice we've relied on from "experienced professionals", have caused so many of these headaches and fire drills and lost $$.  I'm quickly learning that I just can't rely on anyone but myself and that's pretty demoralizing. 

We're in the middle of our first rehab for a buy and hold, two-unit building.  Demo is complete and brand new electric, plumbing, HVAC, etc. are about to be installed starting next week. 

In order to close on the 203k loan, the lender required we purchase a builders risk policy.  Because of delays with originally closing the loan (which we finally closed back in November 2014), the 6-month policy is about to expire and the insurance agent says we can only renew for either 6-months or 12-months even though the rest of the project should be wrapped up by April. 

Our contractor told us that we don't need to renew the policy because a) we're not doing any work to the structural walls or foundation and b) he carries his own liability insurance which would cover us in the event anything happened to the house before we can get it rented and get a Homeowner's policy.

Does this sound right?  Should we renew the builders risk even though our contractor has liability insurance?  Again, this is our first rehab so any help is greatly appreciated.

Matt

I took a loan out of my 401(k) of $25,000 to purchase our first investment property.  For the 401(k) loan, I'm repaying the loan with distributions from my paychecks plus 4.25% interest.  I would think that no matter what type of retirement account you draw from, you wouldn't have to deposit profits from how you used the funds; only the loan amount and any interest that  might be imposed.