All Forum Posts by: Paul Chapey

David Doyle – That George Coats book brings back distant memories of trying to find a copy. About 15 years ago, I located one in a local library in San Bernardino County. Most of the library copies had been stolen because it was about the only book on the subject at the time.

Gordon has a very solid reputation and is well known in Southern California. I don't know about his course, but I did hear him address a small group of investors –  we used to have an annual reunion with Ward Hannigan. I called him a few times after that with questions, and he always helped me out.

Granite installs on rehabs is very competitive in Southern California. I left So. Cal in 2015, and for years, I paid $345 per 9-foot prefabbed for basic granite. That includes demo and everything. Undermount sinks were an additional $75. If any material was left over, it could be used for a bathroom with no additional cost because it came from the 9 foot piece. The granite guy and his helper would buy their pre fabs in Anaheim and then fabricate in the driveway. He only worked directly for rehabbers. 

In California, and I suspect New Jersey, using the term "wipes out" is misleading. More appropriately, it should really be "wipes off." A junior-lien-holder's interest in the property is lost, but the junior lienholder can still sue you personally on the promissory note, thus not wiped out.

A better commission split for you would have been 2% to the listing agent and 3% for the selling agent. The most difficult part of a listing agent's work is obtaining your listing.

Agree Aaron Mazzrillo on lending to a local flipper. Well stated.

Eric – That would be calendar days. Don't worry about it. You can check the Riverside County Grantor/Grantee index to see if anything has been recorded. After 15 days have expired,  lookup the foreclosed owner by name and see if there have been any documents recorded subsequent to the date of the auction.

Congrats on winning a trustee-sale auction. I bought a lot of auction properties in Riverside county from 2010 to 2015 but then stopped after available properties dried up. I have friends who still keep their eyes on what's going to sale, and I know it's extremely competitive now. It's always been a tough game, but now even more so.

Was this your first attempt? How did you beat out the local sharks? I can't imagine they weren't ready for the subject property. Perhaps the trustee telling you that the trustee's deed will be delayed means there were some title issues? You have to record that trustee's deed yourself after you receive it. If you record within 15 days of the auction date, the trustee's deed is considered recorded on the auction date. If you record after 15 days, the actual date is recorded. Although very unlikely, this opens the possibility that another document could be recorded before yours.

Be sure your fire insurance is for a stated vacant house. You might also look into coverage for malicious mischief and vandalism. That coverage can get pricey, but it's trivial in the overall cost of doing business. Few companies provide this coverage. I used American Modern, Foremost and Lloyds of London. 

Best of luck with this property. It's very difficult to win trustee-sale auctions and you did.

I use Del Toro and they're good.

1) If you have a relationship with a real estate agent, ask them for a contact at the title company they usually do business with. Ask to speak to a title officer and not a rep. Give the address and ask the officer to not only check the address but also the grantor/grantee index. This might show an IRS lien that doesn't come up on the address search. If there is an IRS lien and you can wait out the 120 days for the IRS redemption rights to expire, then don't let that lien stop you. The IRS very seldom exercises their right of redemption. If they do, they will refund your money plus a small interest amount. Ask the title officer to also check the status of property-tax payments. You will be responsible to later pay those in full. BTW, this might be a very simple title search. BTW, ask the officer for the document numbers of the grant deed and trust deed going to sale. If they are sequential, that is, the T.D. is one number higher than the grant deed, then the trust deed is the original one recorded at time when the property was purchased. Unless there's a subordination agreement, the trust deed is in the first position. If the grant deed shows an escrow transaction and an institutional beneficiary, you're in a very solid situation.

2) You just want to be certain that you're buying a first trust deed. The foreclosure will remove all junior liens but not the IRS lien. It will not remove any property tax that is due. BTW, people use the term that a California foreclosure "wipes out" a lien. It really just removes the security of the property because the lien can be pursued judicially against the trustor (seller/owner) of the property.

3) At the auction, consider it a red flag if no locals bid on the property. That means there are potentially serious problems such as your title search missing a subordination agreement and the trust deed going to sale is actually a second and not a first. Or  perhaps the property is over priced. There was a time when no one else jumping in on an opening bid meant fantastic opportunity, but today there are few surprises, and every knowledgeable trustee investor will be ready for the property.

4) Go knock on the door of the property and speak to the owner or tenant. Tenants have different rights than owners. Determine what their plans are after the sale. Will they just do a hassle-free move, demand cash for keys or will you have to evict?