All Forum Posts by: Patrick L.

There is some luck but you can get a little bit of an idea of condition based on an exterior assessment.   Park your vehicle a couple houses down and walk by the house a couple times and see what you notice.   Is the yard mowed?  Is there any landscaping?   Is there trash in the yard?   What type of window coverings are in the property.....a decent tenant might have curtains or blinds in good shape where a bad tenant might have bed sheets, ripped up blinds or even aluminum foil.   That's just a partial list but anything you see on the outside can help you gain information on the type of occupant that's living there.  

That's part of the risk when buying occupied distressed properties without seeing the inside or even knowing who lives there. I've had some go well and some not so well. I bought an occupied REO a while back with a squatter where the house was full of human waste, mostly in buckets. The squatter was gone by the time I closed so at least I didn't have to deal with removing him but the house was a mess.....and I was able to buy it far enough below market value where i was still happy with the deal. Luckily I have people that work for me that are willing to do disgusting jobs in order to get our projects done.

On the flip side I bought an occupied house 2 weeks ago at a foreclosure auction and the occupant turned out to be good tenants.   I made contact with the tenants after paying for it and was able to view the inside which was immaculate and I was able work out a new lease and raise the rent $300/month from their previous month to month agreement.  The only thing I had to do was fix their heat which hadn't worked in a year (bad thermostat, $20 fix).  I got the Feb rent check on Jan 29th.  

The foreclosure sale date being close is better for the bank than it is for you. They're almost to the point where they can have ownership back and list it and get whatever the market is willing to pay. There isn't much benefit of saving them time and expense like there is early on, so unless your offer is about what they'd expect to sell it for as a REO then why would they take less at this point?

 The asking price of a short sale is set by the current owner and their agent and has nothing to do with how the bank values the property or what they will accept for it.   There is no way to tell what the bank will do, submit your offer and see if they accept, reject or counter it.  

Have you gone through the past auctions to see what similar properties to those you might be interested in buying have sold for?  You can get a rough idea of what percentage of retail the buyers are paying and what you would expect to pay.  

Generally most of the properties I'm interested get redeemed the day before or day of the auction so there is a lot of wasted time doing research but that's part of the process.  

$7500 might be enough for something, but if you think you're going to get a $50k house for $7500 you're not in the right ball park.   For $7500 in Florida you're looking at a trailer, a vacant lot, a house that's falling down, etc.   You cannot sell with a warranty deed right away unless you do a quiet title action ($3k+ and around 4-6 months if everything goes smoothly).  The opening bids are just the opening bids and any property with real value will go somewhere near it's actual value.    Most counties in Florida are very competitive, the stories you read in the books are probably fiction or an isolated case from a different era.  

I would suggest researching the properties you're interested in and watching the auction.  Try to come up with what YOU think that value is before the auction and see what it goes for.   Research who's buying them in your county and what they're doing with them.  

Taxes were  $829.71 for 2015 on that property.   That was on a $36k assessed value but the property appraiser's website now shows it assessed at $65k so expect that number to be more like $1,500 next year.   Insurance will probably be around $1,500.  Add in vacancy (8%, $1000), management (10%, $1,200) and repairs/reserves (it's a 1927 house in a not so great area so expect those to be high....let's use 15% as a rough guess, $1,800) .   That's $7000 in annual expenses which would give you a 7.5 cap.   

 Even a minimal cage is a deterrent.  If someone wants something they can always steal it, it's just a matter of how much work and  how much risk.   Now you're talking about running a sawzall and using your truck?   If you just wanted copper wouldn't you just keep moving until you found another house that had no cage instead?    

I used to put cages on my class C properties but with new laws and scrap prices being so low it really hasn't been as much of an issue lately around here.   On a rental I don't think a cage would turn off a buyer, better safe than sorry especially knowing that as a rental it may go vacant from time to time where as an owner occupied property would stay occupied.  

The bank doesn't own the house until they complete their foreclosure.  You cannot sell something you don't own.   They could sell the loan and you could foreclose but buying a 1 off loan from a large bank is never going to happen. 

Definitely compare what brand of equipment each is using, a Goodman is going to be a lot cheaper than something like Carrier but will most likely give you a lot more trouble.    I would have it done with a permit for your protection.  Material cost is probably going to be around $4k.