I am looking for properties that I can purchase at 40 cents on the dollar. Anyone have good experience finding properties like this. Prefer not to rehab.
Thanks
Rob
40 cents huh? The problem I always have with that Theroy is Sure you can buy property at 40% no problem! Yet you are only going to find 2 maybe 3 a year. Personally I like to get them at 60-70% and do 40-50 a month. In the long run you make more money.
I am willing to bet one of two things are going on here and I know this because I have been doing this awhile.
OPTION 1
You bought a book or course that said you can do this. And its right you can the deals are just few and far between…
OPTION 2
You ran into a investor that wants to buy properties and will pay up to 40% and he is a multi millionaire that wants you to find properties that he can buy for that price.
There are 2 other options as well I am willing to bet that its one of these two!
I am interested in bulk reos because I figure it would be a great way to buy properties at that 40 percent mark. I figure premier properties would be a decent bet because banks might have them on thier books for a while. I haven’t bought a course on this topic, (but if I did I would look on ebay first). I probably should eventually, just to get added information that I could look over.
My exit strategy would be to sell them at auctions for a quick flip. I have built a decent relationship with an auction company that would be willing to work with me once I start bringing them inventory.
I have a private funder but he is only my funding source, he only wants his return. I also have access to a few hard money lenders as well. I like your idea of buying more properties and getting them for a little higher percentage, but eventually I would love to have a relationship with a bank to get them at the 40% mark.
Keep in mind that all the bulk REO’s that they want to sell at 40 cents are in the middle of nowhere. Or the vacant house in between the two crack houses in the ghetto! You will also get some awesome properties that will sell right away at a decent price. And that is great as long as you are willing to accept the fact that the other houses will eat your profits.
Now as far as the Auction price on everything Just wondering WHY? Carry back 20% and create a nice income for yourself.
Trust me I am not trying to tell you this is a bad idea. Because it really isin’t I am just warning you of the outcome that it will bring. I have floated this boat before and still own a few (in the middle of nowhere) that I wish I would have never ended up with from 11 years ago.
With Bulk REO you have to take the bad with the good.
GOOD FAST OR CHEAP PICK TWO!
You want something GOOD and FAST ITS NOT CHEAP
GOOD AND CHEAP its not fast
FAST AND CHEAP ITS NOT GOOD!
You only get two!
I figure with my simple concept it would get my foot in the door with real estate investing.
Look for a place where you want to invest. Ask the neighbors if the property could be considered a cheap investment. Be sure to study the details before you consider buying it if it is worthy or not.
I am mainly interested in areas that I could drive to and back in a day. Any properties in GA/SC/FL that need light to no rehab. I know what areas around the city I live in that I need to stay away and where I would love to buy properties. I have two realtors that are working with me in GA/SC that will give me te guidance I need to purchase properties.
Anyone have any advice on probates, short sales, or other methods of finding decent properties at good pricing.
Hi Rob,
The most inexspensive way to buy properties for much less than 40% on the dollar is to purchase them through County Tax Deed sales. These are sales/auctions that are held by your local county. Counties have hundreds or thousands of properties that people are not paying the prop. tax on for a number of reasons. The counties must have a way of collecting the monies they are owed or the county will go broke. So they either sell the delinquent debt in the form of a tax lien certificate, or they just auction of the deed to he property with the starting bid being the total amount in back taxes. Fl has these sales in every county, sales are held by the clerk of circuit courts. SC only sells the tax lien certificates that pay 12% annually, or you get the prop free and clear of mortgages. GA sells the (redeemable) deed, but allows the homeowner 1 year to reddem, if they do, on any day (day 26,276,etc…you get a flat rate of 20%, if they dont redeem, you get the prop free and clear of mort…
so, based upon what you are saying that you would like to do, FL will be your best option…here in FL…50 & 60 cents on the dollar is retail…don’t pay 6o cents on the dollar…the FDIC (the biggest landlord now in the US) has thousands of properties that they will be selling for 50 cents on the dollar…the reason for this is, when a bank fails and another bank takes them over, the other bank only gets the "good assets…while all the bad assets go the FDIC…they dont want all these properties, so you will start to see them just getting rid of them for real cheap real soon.
Here, let me give you an example…
I attended a tax deed auction a few months ago in Brevard County, FL. Here are just a few of the properties that were sold…no redemption in this state, once you pay for it, it is yours!
single family home Cocoa Beach…value $125,000…auction price $28,000 (22% of value)…3.14 acres…market value $157,000…auction $47,000 (31% of value)…small single family home…market value $45,000…sold for $3,000…(an incredible 7% of value)…single family home $90,000…sold for $29,000…(32% of value)…
as you can see, all of these properties (and there was several others) were sold for less than 40 cents on the dollar…the bidding starts at the back taxes (usually somewhere between 2% - 6% of value…myself and the other investors in the country who are invloved witht he tax lien & deed business fly beneath the radar…everybody wants to do foreclosures…they are everywhere, but why buy them, the prices of homes are going to continue to drop until the bottom falls out…until we stop bailing the banks out, we wont hit bottom…as soon as we stop bailing them out, we will hit bottom, and the next day we will be going the opposite direction…which is up.
Let me know if you have any questions, I think you really should look into this…Good Luck
I might have to consider buying most of my properties in FL now lol. I knew in GA that there was a one year redemmable period, in FL once it is bought it is yours with no other strings attached? How do you check out the properties before they are auctioned off?
Would anyone know any other ways to find inexpensive properties in GA/SC?
Thanks
Hi Rob
here is an excerpt from my 12-page report that I wrote on the topic…this should answer your questions on how to research properties in FL…
If I wanted to research a tax sale property in Florida, of course I would research the area the property is located, the assessed & market value, the condition of the property, and so on. Now I need to research the title to the property to see if any liens exist on the property. After that, I need to know what liens in the state of Florida will survive the issuance of a tax deed to check and see if any of these exist on the property I’m interested in. Here is what the state law says in Florida (you may wish to consult with an attorney. I’m not an attorney, and it is not my intention to provide legal advice)….
Florida statute 197.522 provides in part, “ …except as specifically provided in this chapter, no right, interest, restriction, or other covenant will survive the issuance of a tax deed, except that lien of record held by a municipal or County Governmental unit, when such lien is not satisfied as of the disbursement of proceeds of sale under the provisions of Florida Statute 197.582, will survive the issuance of a tax deed.
So what does this really long sentence mean to me the investor? This means that in the state of Florida, the only liens that will survive the issuance of a tax deed (along with Federal IRS liens) are special assessments held by either the city or the county. So when I’m researching the title to the property in the state of Florida, I’m looking for IRS liens, and municipal & county assessments. If I need further help I can have a professional title company perform a title search for around $100. This is something you should always do when considering purchasing a tax deed property. Where can I find the title to the property? I can research the title to the property through the Public Records within the County. This may be done physically at the county records or through the county records online. Most of the Counties now have the public records available through the internet. You may be asking yourself, “What liens or special assessments do I need to be aware of in my particular state?” Well, you need to get a copy of the state laws for your state and find the section that discusses what (if any) liens or assessments will survive the issuance of a tax deed.
Also, I want you to now pay attention to the phrase “when such lien is not satisfied as of the disbursement of proceeds of sale” from the state statute paragraph from above. What this means is, if the property is bid up from the minimum bid (which is the total amount of unpaid taxes owed), then these liens may be covered in part or in full. So let’s say the minimum bid is $10,000 and a $5,000 County assessment is attached to the title of the property. If the property is bid up to $18,000, then the person who is the highest bidder will not be responsible to pay the $5,000 lien because it has been paid for by the disbursement of proceeds from the sale. So it is a smart investor who will be aware of all liens on the property that he or she may be responsible for if they are the winning bidder.
Here are a few brief rules when researching the real property title. What is it you are trying to do when researching the tax sale properties? Your task in doing a title search is to identify all of the encumbrances against a particular property and their order of priority. What is an encumbrance? The answer is anything owed against the property. For example (not necessarily in order of priority)….taxes, assessments, liens, easements, mortgages, trust deeds, pending legal actions, vendors claims, encroachments, and building restrictions. Who is number 1 in terms of priority of encumbrances? Priority or seniority for the purposes of our discussion is who gets paid first, and who will be second, and so on, if a foreclosure action is activated. According to Barry Adams in his book, “Researching the Title of Real Property”, the order of first priority is always the Property Taxes.
Whether you are investing in tax lien certificates or tax deeds, and depending on what state you are investing in will determine what procedures you should follow when performing your due diligence. If you are planning on purchasing tax deed properties you will want to perform a little more research.
what you could do is focus on buying the propeties in Fl…and then purchasing some certificates in GA and SC, and forget about them…the worst that will happen is you’ll earn 20% in GA, and 12% in SC…only 92$ of properties in SC will get redeemed…if you get a property, you can flip and make a seriously high profit margin
Good Luck, wishing you the best
Awesome information. Thank you!!
I might have to talk to my private lenders to find out how they would like me to go about making bids at these auctions. How much time would a bidder have to close? What would happen if the highest bidder was not able to close?
Does anyone have any information about using to a probate attorney for leads?
How would one find these auctions and how would one bid without traveling down to FL?
How would I fund Tax liens in GA when my lenders are requiring their returns in 90 days?
Hi Rob,
you are very welcome sir, this really is a great site, I’m fairly new to it as well. Here is the way it works in FL, and the county will not stray from the rules…you would want to start your research 2-4 days before the auction takes place, you need to have enough time to get a list of the properties, check on the ones that have not yet been redeemed, research the titles to make sure there ar no really big snags on assesments you might be responsible for,and then ALWAYS go and look at the property with your own eyes…do not miss this step. Then have some fum at the auction, that is the real exciting part.
You want to have the funds to pay immediately after the sale…the movers and shakers bring either cash or certified funds with them to the sale, and when they win a bid they walk to the back of the room and pay in full (please note that you have only 24 hours to come up with the funds to pay, or you forfeit the property and you will not be allowed into future sales…also, you need at least $200 cash to hold the property for 24 hours…but please aslo note that the property owner can redeem it right up until the property is paid for in full…so even if you pay the $200 and leave to go to the bank, the prop owner can still come in and redeem…that would not be fun for you…)
Tax Deed auction are held in every county in FL, and they are handled by the clerk of circuit court and not the county treasurer who handles the initial lien sales…you cannot bid without being down here, and I wouldnt recommend if you could…see many tax certificate sales are now online, and anyone can bid in the US…so the result is more competition and and less profit…with the deed sales in FL…you have to be there…so many people are not willing and are too lazy to get off their rusty dusty…it takes someresearch…you gotta get the list, research the title, go and look at the properties, get the funds ready, prepare to bid, and make sure you are organized…but, in my opinion, the results and profits you can get by doing it right far outweigh the necessary 2-3 days it takes to prepare…dont bother just looking at one property go and looka t least 5-10…if someone outbids what you are looking to spend (( 20-30 cents on the dollar ))…then no worries, just move on to the next one…or attend the next sale in 2-3 weeks
the beauty is they have these sales all the time…and the number is increasing every month
Good Luck
if you need to return the funds and flip the property within 90 days…GA and SC just will not work for you…sometimes a particular state will just not fit your criteria.
Here is something you can do, and I’ll think you’ll have some fun, see what you can find…you can call some counties in SC…they sell tax liens, and the redemption is 1 year, but here is something most do not know…
In SC (and I got this straight from a county official I called)…only 40% of properties are even bid on…and what happens to the other properties is they go into a sort of “surplus lands” category (i think this is the exact term she used)…so let us say that 11 months later, there were still some left…you can go and buy them for just the delinquent taxes, and if not redeemed with another month, you now own the property free and clear of all mortgages…now you can flip it (you own it for only 2-8% of assessed value), make what you can, and move on to the next one
you may have to calla few counties, but this sisthe way it works
Good Luck
Awesome, I might have to look more into this. I am assuming the bigger cities like Jax and Orlando would be great cities to start in but would have more competition? Would you consider Jax to be an area with a decent resell value, (closer driving distance)?
I might have to go down there with a briefcase handcuffed to my wrist full of funds huh, lol.
What if the homeowner filed a bankruptcy after the purchase, any problems there?
Boy, this discussion has stirred that little gerbil that lives in my head!!!
Im on it. Thanks!!!
I fell you Rob,
this is kind of a very well hidden market…until several years ago, hardly anyone really knew about, only the judges, lawyers, and of course bankers…and before I answer your question let me tell you this… Bank of America was or still is the single largest purchaser of tax lien certificates in America today…so they take our money, invest it in certificates that pay 16 - 18 - 24 - all the way up to 50%…and give us back a mere 1.59%…if the banks are buying them, should you be?..Yes…anyways, all of the banks right now are running scared…they have dropped off from the sales, which is good news for you and me. less competition.
You’d be surprised where the best sales are… it is helpful if you have been to a few sales or have been in the business for a little bit…Jacksonville is a good sale with usually very little competition, although sometimes as much as 40% of the homes are not too desirable…they have sales 4 times a year (which is among the lowest amount in the state)…my countyhas them at least every other week…sometimes every week…Now Orlando, which is in Volusia County, has usually a small amount of properties with very little competition…but the sales are smaller…
If Jacksonville is good area and closer for you…that should be fine…as long as you can buy for 10-20 cents on the dollar, you can resell to some other investor or maybe a familtrying to get a great deal…the resell value in Jacksonville will probably be no more than 50-% of market value…so make sure you buy at bargain prices…dont overbid on a property, there are too many to choose from to overbid…it is just not necessary
once you have paid for it it is yours…they cannot file for bankruptcy fter the sale…although if they file before the sale, then the property by law will not go to the auction block, so nothing to worry about there…the only time bankruptcy comes into play in Fl is on tax liens because that can extend the waiting period you have to wait to get paid, and can sometimes reduce the interest rate all the way down to 6%…(this differs becuase it is up to the bankruptcy courts and judge…
It is a simple process, and the best way I know to buy distressed property…but you want to make sure you always get a copy of the county and ruiles,and you know the state laws for real estate
Good Luck
that meant to be I feel you…not fell…sorry