All Forum Posts by: Michael Lee

@Michael Lee  you may want to repost this in the Tax lien category... you posted this in MHP category.   you will probably get better feedback

Michael,

That is a tough question to answer due to your health and unknown financial situation. If you have money set aside that you can invest and if lost, you will still be ok, then I say get into something you can do that won't cause much stress. I haven't personally persued tax liens because of all the things that go along with it. I'd possibly suggest investing in REIT's instead. This should give you a more structured return on your investments with less time/energy involved.

@Michael Lee

You have very good advice from all the gentleman above already.

With your construction background & 25% interest in TX. I do think investing in TX tax deed will be a good move for you; as You can collect rent(income) from day 1 during the redemption period.

Like @Ned Carey suggested. Know the state statue regarding tax sale is extremely important. Also make sure you MUST drive & check out the property before bidding.

Tax lien in other states can be a very slow process, but if you are patient & good with tracking process; it can be very rewarding when you can foreclose on the property.

@Richard D & @Roy Oliphant are two BP members that knows TX tax sale well. Connect with them & may be they can provide you with more local info.P

@Michael Lee i have moved your post to the tax liens forum as Jay suggested. 

It is tough to say what is the best strategy for any one person. Your goals, resources, and personal skills all factor in to the decision. 

The free ultimate beginners guide under the learn tab above will give you an overview of real estate investing and may help you decide.

I do tax liens in a big way. I do quite well with them but I must cation you that they are not without risk as many gurus pitching courses would imply. You have to know that the property is valuable enough to be security for your investment. Going by assessed value (the tax value) is not necessarily a good indicator. 

Also you need to know the rules which vary by area. In my state tax liens expire worthless after 2 years if you have not started foreclosure. If you didn't know that you could lose a lot of money. 

Hubby and I have buy and hold properties.  I'm trying to branch out into "subject to" deals and assignment sales as well.  Not having much luck thus far, and trying not to get discouraged.  I need to post my first deal here to get it moved quickly before foreclosure happens...I'm looking forward to learning from all the collected wisdom, and sharing my experiences when I get some myself!

Local Agent specializing in investment property

Hi @Reid Schieler the short answer is "No" you don't have to form a legal entity for your current and potential investments...but you probably should. Putting your investments in an LLC can help shield you Hfrom liability and also provide some additional flexibility for you from a tax standpoint.

There is a third option that's in-between paying cash and using conventional financing. 

There are a handful of lenders in the Houston area that will finance the purchase of distressed property via a hard money loan and streamline the refinance process into long-term Fannie Mae conforming financing.

There are multiple benefits to purchasing properties via this type of financing. To answer your original questions, using this "temporary to permanent" financing would allow you to compete with other cash offers as you would be able to close in as little as 7 days. I can only speak for myself and our company, but cash, lines of credit, and hard money financing are all the same thing as far as we're concerned. (Yes, they're all technically different, but they function the same as far as a buyer's ability close quickly and relatively hassle-free. [Actual cash is always king.])

The answer to your second question depends on the amount of capital you're looking to put into play. If you have $100k to invest, by purchasing rentals using only cash it will take you some time to build up a sizable portfolio. However, if you utilize financing (of almost any kind) you'll be able to build your portfolio much quicker. If you have $10M and you're looking to build a rental portfolio, using financing might not necessarily make sense if you're trying to move quickly.

Cash deals are beneficial to sellers because they're more straight-forward and are therefore "cleaner" transactions. There aren't any of the issues associated with a lender, i.e. no inspections, appraisals, surveys, underwriting, loan doc. prep, etc. Cash deals typically close much quicker vs. a conventional loan, which can take upwards of 45+ days, especially with the implementation of the new TRID guidelines.

In general, your actual cash-on-cash return will be higher when you're leveraging your investments by using financing. @Piet Strydom hit the nail right on the head: you might earn less cash flow per month by using financing, but your cost basis for acquisition of the property will be significantly lower and therefore your cash-on-cash return will be higher. ($100k cost basis using cash vs. $25k using financing in your example.) I know you know this, but your annual return as a percentage is your annual net cash flow divided by your initial cost basis.

Feel free to reach out to me directly if you have any questions about the financing I mentioned above or otherwise.

Well, if it is - great! My name is Daniel and I'm new to BiggerPockets. I'm currently a freelance IT Consultant and several years ago, wanted to get into real estate investing. However, I got sidetracked with my job at the time and had to study to get some IT certifications.

Anyway, I'm excited to be a part of this community. I just recently moved to the Los Angeles area (which I'm reading is a bad place for REI?) from the Central Valley/Fresno area, so I'm anxious to see what kinds of deals I'll be able to make here in SoCal. I hope to get to speak/work with you all. Thanks!

Hello Everyone- I am new to bigger pockets. I live in Colorado Springs and I'm hooked on investing in Real Estate. I prefer multi-family deals...