All Forum Posts by: Robert Leonard

@Ryan Mackfee If you expect the property to be vacant more than 30 days, you probably need to have a vacant dwelling policy.  You need to read your policy to know what that period is with your insurer.  You may also need a builder's risk policy to cover materials that could get stolen if they get delivered and not installed quickly.  That's why you want "on time delivery" of materials when you expect them to be installed and avoid letting them sit around the job site. 

You need to have this conversation with your insurance provider ASAP.  The surprise may be on you if you have an incident and your insurer finds out you have a vacant dwelling.  You may have no coverage at all right now.

@Mike Rubin you seem to have your mind set on paying off these student loans ASAP and it's your money, so I won't argue that point.  If owing money affects your ability to sleep at night, by all means pay it off.

My point will be for the benefit of a different perspective for readers here to learn about the factors to consider in real estate and other financial matters.  If I had a 35k student loan at say 6% or less, and I had 35k in hand or coming soon, I have a couple of options. 

I could pay off the student loan and save the 6% or less.  Then save up until I have enough to invest again.

On the other hand, if I know how to invest in real estate, where I can consistently make double digit rates of return, often over 20%.  If a person understands the basic math and doesn't mind having some low cost debt (as opposed to high cost consumer debt like credit cards, car/payday loans etc.) you are much better off investing your money elsewhere and paying back the debt over time or at a later opportunity.

As much as I like most of Dave Ramsey's material, I think the "live debt free" idea, is extreme and comes at a significant opportunity cost at today's rates of interest.

Home Depot has a buy more save more, program for appliances that offers a pretty significant discount.  When you buy six or more appliances, they take a standard discount of 400 or 600 (it was almost a year ago, I'm not definite) off the total purchase!

I've also heard of HD and Lowes sending those bulk purchases "out to bid" or to their "bid desk" for special bulk pricing? It's definitely worth asking when you make a bulk purchase if their are any special programs that will help take some of the bite out of a large cash outlay!

@jennifer Kim  Unless you have an odd bold color or it really needs painting I wouldn't paint on request. BUT, I think you've admitted some rooms need it and others need touch up.  I always do those things before I consider a house ready for showing. I want the best tenants, so I always show my properties at their best.

I like @Greg Shelburne

@Chris K. it's a mixed bag of some you can walkthrough and others you can't. The vacant ones that show a listing agent are actually listed on the MLS, but still sold through auction.com and you can get in to those. When they are listed on their website as "occupied" they usually aren't listed on the MLS and you can't get in to those.

I've given it a try several times, but no success yet.  Despite being the "winning bidder" a couple times at below the reserve.  They didn't make a counter offer.  They just asked me to make my highest and best offer with no idea of how much more they wanted.  I thought that was a bit shady. 

The last time a tried a little over a month ago, another bidder and myself went over the reserve and I was outbid.  The property was in a great area and only needed flooring in the living room and it was in move-in condition.  That same property was listed for sale one week later, so that "winning bidder" obviously executed the sale with auction.com pretty quickly.

@Casey Bradford

@Casey Bradford

@Casey Bradford

See you around the site and maybe at one of the meetings?

@Brennon Manske when you start talking about abandoned property of a deceased person, you add another layer of complexity. Those rules are different from state to state based on probate, inheritance and adjudication laws that determine if the property is taken over by the municipality due to an excessive amount of back taxes and liens for things like grass cutting.

Your best bet is to talk to the local investors you can connect with and see why no one else is after such properties. It may be that the process is nearly impossible or that they aren't willing to do the work like you are? Definitely dig in to the facts from the written law and don't take anyone's word for what you can or can't do. You would be surprised how many people will accept a prevailing attitude or practice to be the law or "the way it works."

The answer to your questions are all matters of state law and local ordinances. You'll know you have the definite answer when you see it in writing.

@Brennon Manske the correct answer to your question is going to be state specific as each state has their own laws on tax sales of real estate and the redemption periods.

The gist of how it works is, anyone can pay the taxes owed on a property at a "tax sale" which can be live auction style or online (depends on jurisdiction). I don't know of anywhere where you get instant ownership of the property from a tax sale.

Usually there is a "redemption period" (what you referred to as the property was reclaimed, which may be the correct term for your area?) that allows the owner who owes the past due taxes to pay the taxes and penalties to "redeem" their ownership rights to the property. The redemption periods can be a matter of months or as much as 5 years.

Many times, investors will pay the taxes, never expecting to obtain the properties. They only want to collect the hefty penalties of 12-18% from the late tax payers as a way of getting high returns on low risk investments.

@Alex Flowers this is where the 50% rule is useful. On residential properties, expenses are normally in the range of 50% of gross rents over the long run. When the landlord pays water, it's closer to 60%.

If you use those percentages to estimate expenses, you'll make a fair ball park estimate of the NOI. That will help you arrive at what it's worth to you based on market or your goal of cap rate.

The rest of what matters in determining value comes down to the condition of the property and the character of the neighborhood.

@Maggie H. Sorry to hear of your current circumstances. It's not likely that your husband is in a self directed IRA in the sense of the investments you may have read about here on BP if he is in conventional investments like stocks. I can't advise you on your personal situation because I would need a lot of information that shouldn't be shared on the Internet with someone you don't really know.

Here's what I would tell my sister, if she were in a similar circumstance. We live in a community property state (that matters). Vickie, (that's my sister's name) you should have the funds transferred to a Vanguard Money Market Mutual fund when/if your husband transfers the funds to you as required by the divorce decree. If the funds are Roth, you should transfer them to a Roth account with the same investment selection I already mentioned. If the funds are in a traditional IRA or 401k, you should transfer them to a traditional IRA account with the same investment selection I mentioned.

Leave the funds in the appropriate account at Vanguard until you are ready to transfer the funds to a self directed IRA that will be of a matching tax status (Roth or traditional). If you don't know the difference in those, that's why I gave you a way to park the funds until you learn what the difference is. You also need to take some time to learn how an SD IRA works - there is really a lot to know and you need to know how it all works before you try to use it.

That, Vickie, is all I can say until you take the time to learn how all of this works and are in a position to make informed decisions for yourself. If the funds are important to you, you will take the time to learn this stuff. Otherwise, you are at the mercy of whoever you trust to make the decisions for you.