I have a couple of questions for you US investors
Can you comment on any of the following
have you ever had a Chapter 8 tenant?
Ever bought at a Sheriff’s sale?
Ever run the eviction process through to Bailiff removal?
Ever had a bought a property with an existing undeclared lien?Thanks in advance
Steve
pc9geek wrote:I have a couple of questions for you US investors Can you comment on any of the following have you ever had a Chapter 8 tenant? Ever bought at a Sheriff's sale? Ever run the eviction process through to Bailiff removal? Ever had a bought a property with an existing undeclared lien? Thanks in advance SteveBeen a way for a few days quite busy.I am going to say if any one of us USA investors has done this would Be Jay Hinrichs. Send him a PM and ask him
Alex
I dont like section 8 tenants because it is Federal government. They can be hard to get bad tenants out.
If you buy property through forclosures you have to pay cash and you cannot inspect before hand.I deal in Texas so evicting tenants is easy can take 4-6 weeks because they are pro landlord if you are in California or worse New York state it can take a long time they are pro tenant
In terms of tax liens you should always go through a title company to make sure the title is clear.
Nigel Kibel | Property Know How
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Nothing wrong with Sect 8 – if you have the tools to do the work. Emma171 thrives on it as I am sure many others would. Not my cup of oolong, but please if you venture down this path, give Kyler a call and spend some time with him – he ‘da man who will teach you most:)…
I was reading a terrific article on the increasing rate of foreclosure activity, and what in means for the market in various states.
I rarely agree with anything CNN says, but the facts seem to be in place in this story.
http://money.cnn.com/2012/04/13/real_estate/foreclosures/index.htm
Steve
Nigel Kibel wrote:I dont like section 8 tenants because it is Federal government. They can be hard to get bad tenants out. Not sure for the rest of the USA in NC and SC we love section 8 .Government paid rent higher then the market average. Guaranteed by the 3rd of the month. Sure they are pitfalls and down side but you have to weight that out.If you buy property through forclosures you have to pay cash and you cannot inspect before hand. Not sure about this I buy foreclosures and inspect every property. Now the ones on the court auction ( if that is what you are referring to l tend to do drive buys as some still have tenants. Now the sheriff sales have not attempted these but I am sure the situation could be worse.
I deal in Texas so evicting tenants is easy can take 4-6 weeks because they are pro landlord if you are in California or worse New York state it can take a long time they are pro tenant In terms of tax liens you should always go through a title company to make sure the title is clear.
SC and NC very similar and easier to evict . For our company or us buying at court auctions we have our Agent ( paralegal go check the property to make sure no liens( court house ).) That is some thing I just refuse to do is buy something with possible liens. I am sure there are people who do it but not for me.There are plenty of bank owned properties to choose from so no need for us.
Just my two cents
lawsjs wrote:Nothing wrong with Sect 8 – if you have the tools to do the work. Emma171 thrives on it as I am sure many others would. Not my cup of oolong, but please if you venture down this path, give Kyler a call and spend some time with him – he 'da man who will teach you most:)…Can not say much about section 8 in other markets but for Charlotte NC and Rock Hill SC. We use it in both of these markets and love it . Our homes are now rehabbed to section 8 standards. ( if any one would want to see the section 8 standards and codes .Email me I can can scan and send them to you these are just for NC and SC This is not advertising this can help people so moderator read before I get flagged for advertising .
Their guild lines are Very strict compared to most of the rehab I see. In Charlotte they are extremely picky. If you go to my website and look up the house Hannae Rae NC sorry forgot address. One of our better rehabs and nicer homes. Section 8 still found some little issues .If section 8 program is going to place a tenant in that house. The lady who applied and I am working to get in is 64 years old. So makes complete sense to me to get her in that house and fix any issue section 8 found. This is guarenteed rental income.pc9geek wrote:I have a couple of questions for you US investors Can you comment on any of the following have you ever had a Chapter 8 tenant? Ever bought at a Sheriff's sale? Ever run the eviction process through to Bailiff removal? Ever had a bought a property with an existing undeclared lien? Thanks in advance SteveThere are companies selling us houses with liens and backtaxes. Make sure you get a warranty deed and title insurance. <moderator: delete advertising> In a sheriff sale you dont always get good prices. Banks bid up the prices at these sales. Section 8 housing has advantages and disadvantages. The main advantage is the guaranteed rent. In some areas section 8 pays rent for years. However, there are inspection requirements to be met and if there is a minor problem with a property they can refuse to release the payment. These tenants tend to be more picky and it can end up being more of a pain to manage these properties, especially with maintenance.
<moderator: delete advertising>I deal with Section 8 properties every day – we all do – http://www.gosection8.com is a fabulous resource for landlords. Yes I have evicted but not a Section 8 tenant. I would not touch section 8 in Alaska or non pro landlord states as they can get “entrenched” bad ways – in a state where it takes 3 months to evict someone through the court system over the tenant amount of the rent – namely $25 you end up not bothering to evict. SO, although it is true that they lose their assistance voucher with an eviction, if no one goes through that then they just continue their evil ways)….I had one in Alaska and learnt my lesson – she TOTALLED the place within 2 months… and had had STELLAR background check from her previous section 8 landlord (happy to be rid of her I am sure) – it was my very first US tenant and I had lovingly hand painted and renovated every single item in the house – put in my first bath surround etc…. $3k worth of damage….. but she was only paying $85 of the rent per month… what do you do??? You let her stay out the rent to recoup the blasted cost of damage… because you can’t get any $$ from her if you sued her – she doesn’t have any.
In VEGAS – they are SO pro landlord that Section 8 tenants worship your place because they know we can evict easily – and thus we get late fees and neat houses – why? That IS their income … their only source of housing IS Section 8 – they lose that and they ARE on the streets and the housing program has even closed the wait list… oh they KNOW they are on a good ticket.
We have had an eviction in Las Vegas (non Section
and, because it is the worlds most pro landlord state, we evicted them and rerented the property within the same month… so so simple.In and out in 10 days – and the sheriff does it all for you…. aaah, just another reason to love good old pro business Vegas…
If you go to the HAP (housing assistance program – it actually isn’t called Section 8 any more but HAP although everyone uses Section
….you can look up the specs of the local county for Section 8. The Nevada one for Vegas will give you the handbook for landlords – just click on “landlords” and it will give you the requirements… they are the same everywhere… safety and to code – but interestingly not CLEANLINESS… fascinating..NOTE THAT IS JUST FOR VEGAS but will give you a great idea.
the danger with foreclosures and auction buying are the liens – both mechanical and non that you face – I generally say if you are at the auctions, triple any HOA dues owed or just veer clear – there is also a brilliant about 17 day time frame between hammer dropping and the actual title insurance that steps in that anyone could in theory file a lien … plus you have to deal with pissed off tenants potentially needing eviction and you had better have a good trash haul out crew ready to roll…. fascinating …. I sent a huge spiel to my investors on it I can forward if interested on auction procedures… VERY VERY tough if you don’t know precise streets – kind of like a box of chocolates…. you never know what your going to get… can be fun but not something I would recommend to the mainstream – INTERESTINGLY FROM MY NOW 90 ODD SOLID HOURS AT AUCTIONS, THEY RARELY GET MUCH BETTER THAN THE OPEN MARKET – especially when you have to factor in the clean up etc….
At some point that will change but for now…. there are plenty of bank rehabbed foreclosures for me not to be concerning myself with auctions. Some of the WORST buys I have seen are at the auctions where I have just sat there going “they are flipping stupid”… and these are the best professional bidders …but they work with streets and numbers. On the plus, retail bidders will always out bid the professionals IF the house they love comes up (rarely does it actually come up on the day you THINK it will). In Vegas you can get a list from any title company that hangs at the auctions as to what is slated to come up and a preliminary lien search (remember if you buy at auctions, you have to clear the liens unless primary etc)….but that changes every day.
A bit quick of an explanation but fascinating process through the foreclosures.
Emma
Auction procedures as personal information only – this was done AGES ago and when I was a newbie and I sent it out to everyone who was interested… it may help you or may not but PLEASE REMEMBER THIS IS PERSONAL OPINION ONLY ON THE PROCEDURES AS I SAW THEM THEM – I HAVE NOT REVISTED THIS SO CAVEAT CAVEAT CAVEAT.
I have an absolute belief in making decisions based on all knowledge….
NO FORMATTING… sorry – figure if you are interested you can format it yourself.
This is an update as to the auction procedures having now sat down with the title agent who has been emailing me the list of liens and upcoming properties. This email is to provide you with as much information as I have (any errors are with full disclaimer that the below is given to the knowledge I have at this point). It will hopefully allow you to make grandiose decisions as to whether this may be a route for you. Remember, there is no real estate agent involved with the auctions – nor are their contracts – this is walking up, buying a house with cash up front, paying off any liens, getting title, cleaning it up, fixing it up and renting or potentially down the line flipping etc.
Now those steps explained in detail:
The properties that are sold at auction have the potential to be great bargains in theory – I have thus far seen GREAT buys and really really crappy buys..
There is NO due diligence time frame, no inspections, no walk throughs, no anything… You can peer through the windows and guesstimate from there. The roof could be collapsing, the a/c may not work, squatters could have broken every single item in this property and you should probably assume they have.
We do not know for sure which properties will ACTUALLY come up for sale on the day, we have a list that we subscribe to that tells us up to 2 weeks out which properties are SLATED to come up but we do not know at this point:
– whether there are known liens that make it inadvisable to bid
– whether it will be postponed
– what the Trustee’s opening bid will be – which may be 20k over any rational bid you would want to make….– the Trustee represents the primary lien holder… At this point, title is actually still in the Owner’s name who is being foreclosed on and as most of you know, this is the final step before title reverts back the bank and, if the property is passed in at auction. The auctioneer will call initially upon any beneficiaries of the current owner as to whether they wish to bid, they will then say the Trustee’s bid is “x” and if any other offers…. If none, this property will officially become a foreclosed property and appear as such ultimately on all real estate listsThe night before the auction, we receive the list of known liens from the title agent that provides this free to those who are willing to use them ( – I am happy to make that swap!)… This will be as close to a preliminary title report as you can get and with the exception of HOA fees (which it is NOT recommended to bid on as apparently you should always triple the amount of $$ stated on the lien) the agent felt comfortable that it is highly unlikely (although not impossible) for a big unknown. He has said that National Title Agency will guarantee that you would not ever lose money on your purchase as a result of a lien not discovered or revealed…or filed in the interim period. You may not make any money but at the worst case they would have too much to lose based on that. These and any other liens discovered must be paid off by the successful bidder during escrow* before clear title is presented… These liens will show up on the closing statement provided by the title company handling escrow* (*rough approximate is “settlement” time frame in Australia handled by a solicitor).
On the day of the auction, the properties come up in random order – there are between 100 and 150 each day and you just have to sit there, listen carefully to the auctioneers very very fast prattle and wait and hope. Any of the following may happen:
– The property is withdrawn from the auction (lienholder and owner having worked a deal)
– The property is postponed from the auction (twice I have had that happen whilst on my “dry” runs)
– The trustee starts with an opening bid that is waaaayyyy too high (think reserve price by bank)
– The beneficiaries of the current owner comes in to bid on the property
– You are outbid
– You winTo BID at auction you must have a representative acting under Power of Attorney (POA notarized) for and on your behalf with the POA held in the name TITLE WILL BE IN – if that is under an LLC you must have the POA made out to the LLC etc…. …
That POA would either
– Have cashier’s checks IN THE NAME THAT TITLE WILL BE to match up to the full and total amount of the winning bid – the POA will sign these to the Trustee and be given receipt … This should be to the PRECISE dollar (no change) – so the object of the exercise is to bid by a minimum of 1 penny (1 cent) above the bid before…… Trust me, I have seen these things go to 81 cents to win!EXAMPLE: The maximum you decide you will bid up to on Property X is $50,101.51. You should have cashier’s checks as follows: 3 x 10k, 4 x 5k and 5 x $20…. Take $5.00 in small change as well….
OR….OPTION….RATHER THAN HAVE ME PHYSICALLY TAKE THE CHECKS….:
YOU CAN USE A COMPANY THAT RESIDES IN THE SAME BUILDING AS THE AUCTIONHope that helps explain the process a little bit.
Quick rough Eviction process in Nevada goes like this:
6th of the month the tenant is in default – you either post yourself a 5 day pay or quit notice or pay the sheriff to do it (I think about $39)…
Even if they pay you 99% of the rent, you can take it and still evict – you can evict for a blissful myriad of issues in NV… love it – including – get this a NO CAUSE eviction….lol! Okay, I am sounding like evil slumlord here but I got so burnt in Alaska when I started that you grow old and wise very rapidly and in my case you stop dealing with multiplexes but I have always self managed every property so I have the war wounds.
On the 5th day, they haven’t paid, you go back to the Sheriff and say sigh, they haven’t paid (interestingly they take your word for it – how bizarre)…and the sheriff will then toddle off down there, do a lock out and you get your house back… and keep the deposit, and sue them for damages and $300 for the eviction process…
By Day 10 you have a new rental sign up and by the 1st of the next month you could have a new tenant in there!
OTHER STATES – you beg and grovel for the tenant to just leave, please please please, just leave, no harm no foul….. and work with them in any way possible to avoid an eviction as quickly as possible…….and hope to GOD they are willing…
WOW………Emma……..WOW
That was an incredible response,there is a lot of important information here. Very very valuable post(s)
once again
thank you!
Steve
Steve
You are most welcome – I live and die work wise to make sure that as OZ, NZ, EUR investors we are all at least armed to make informative decisions based on transparency…. and avoid some of the very very costly basics… (paying to set up a bank account leaps to mind)I live equally in Vegas and Atlanta (I actually have a fab little home while there in "Emma"wood for now but will be in Conyers with my amazing brand new 2700 sq ft 45k Jessica Way property…- it is at 2nd fit off)… …all right, it ISN'T Emmawood but Ellenwood however everyone at Home Depot there and in the agency joke about. As there are always 3 or 4 projects, everyone knows they become a bit of a packhorse for any time with me…(we do all the supply shopping for the projects so that no one scams us on supplies – if you are running multiple sites you darn well have to…)… there is one person who was just with me in Atlanta for a few days who may be reading this who can attest to it!
BUT, this is like big game hunting, or gold hunting and is THE most incredibly addictive and HUGELY fun thing any person could EVER have – OMG…. the thrill of the chase, the looking at the lists of properties (which of course you can get free of charge sent daily to you from any real estate agent) – although sign into Listingbook for Atlanta (just say you are a buyer and you can use my "dummy" login – "selectusaproperty" and "atlanta" if you wish just to play – they are all live properties and you can call any real estate agent you want to buy them) – or use GeorgiaMLS – OOOOhhhh….. actually – you HAVE to do this…when you get to Atlanta – download Redfin App for your iPad or iPhone – click on "nearby homes for sale" – BRILLIANT – then use Trulia (Current Location) for the rental comps – ha, I ALWAYS forget to add spotcrime!
You will get addicted to the hunt, you will fall in love with the market but you MUST just not get emotional, stick to your guns on the buy and view finding the right investment for you as much a part of the strategy as it is fun. This is about the right buy, the right repairs, the right budget, finding the right tenant and using the right property management company. You can use as a yard stick 7% of gross rents as a rule of thumb.
Why ruin your fun if you are going to Atlanta – choose your OWN property… look at comps, ask your contractor for a bid of repairs as you go through it with your r/e agent (aka buyers agent aka someone acting FOR you on your behalf), make a decision and leap!
MUST MUST MUST FOR ANYONE TRAVELLING TO THE US WHO HAS ANY INCLINATION TO BUY A PROPERTY….
DEFINITELY walk into a Home Depot (or Lowe's) – why, it will arm you with enough to call <moderator: delete language> on start up repairs. Ask anyone in the plumbing department for a demonstration of Sharkbite (you can do that at Bunnings too I think), look at these line items: all-in-one toilet ($79), toilet seat ($5.74 – the Bemis SKU 400-000), the Glacier Bay Builders Chrome Faucet at $26 (tap for sink)… then go to blinds….$4.95 (YEP) for a 34" x 64" perfect home or Bali blind.GRANTED, these are not INSTALLED but they WILL adjust your head to the level of costings used in the US.
You can use these prices as yardsticks – a whole house painted two tone, using a licensed and bonded painter up to 2200 sq ft in Atlanta should not be more than $1500 – with serious sheetrock patching – um $1700??
Then look at the carpet selections and the whole house install price of $97… (I would actually use Lowe's for install if I was going mainstream on carpet)…. look at the carpet per sq ft (choose one you like from 0.63 – 0.90 sq ft), look at the underlay per sq ft… (0.49 for 6lb). THEN meet with whomever you are using in the US for your properties and look at them square in the eyes and ask them directly who THEY use and what THEIR prices are….. add it up but they will know that you know enough. If someone wants to rape me on costs, tell me my truck needs repairing at $2k – I know I am being raped but what can I do….?? Know enough to at least know if you need to question it.
Look at BRAND NEW APPLIANCES (not that people generally use NEW – they tend to use warrantied rehabb'd with 6 month warranties)… but if you went run of the mill NEW (think Roper/Westinghouse/Tappan etc) you could go for a dishwasher at $219 (new), Stove at $350, Fridge at $350, washer and dryer each $350… – THESE ARE INSTALLED ON SITE FOR FREE AND INCLUDE HAUL AWAY OF OLD ONES (although I always donate to the drivers – they can sell them).
People are entitled to make money – it costs a lot of money to do business, E&O insurance, be bonded and the like but when these prices are from Home Depot or Lowe's and you could pick up the phone and call them in ….. just be aware about what YOU are being charged for – ESPECIALLY if project management is ON TOP of a "facilitation" fee. HELLLLLOOOOO?
Transparency. Have fun and again, just be very aware of the addiction. Yummy properties await!
pc9geek wrote:I was reading a terrific article on the increasing rate of foreclosure activity, and what in means for the market in various states. I rarely agree with anything CNN says, but the facts seem to be in place in this story. http://money.cnn.com/2012/04/13/real_estate/foreclosures/index.htm Steveon the other side of the coin , the banks not releasing the forcloses , this will keep rents up
and when they forclose on propertys this will keep the tennents upreally good article though thanks steve
Great posts, just had to sign up . . .
Hey,
I am also investing in Las Vegas, pretty much taking it slow and seeing what happens attitude before diving all in.
So far it's been a good experience. I am debating weather to evict a tenant or not. Although they manage to get the rent in during the month, it's never on time. The only problem is that it is such a hassle to find a quality tenant.
BTW PM'd you Emma if you ever want to exchange thoughts on the Vegas market.
emma,
Nice post on the foreclosures… IE sherrif sale….
Each state has its unique process's.
Court house steps purchasing is not for the average passive out of area investor… VERY VERY difficult to compete with the locals who have been working the same market for years..
There is all sorts of colusion that goes on at court house steps with the good ole boys.. it can take you years to brake in.
The amount of work and time someone would have to put into finding a Sheriffs sale and actually buying the house they are interested in is very remote for the reasons you state…
Its a business you need to hone in on 20 or 30 houses you like and you will never know which one you end up with until the auction….
Drop bids are the best opportunities, many homes as emma knows never do have an opening bid and so many investors do not check them out…. Then the bank comes in and drops the bid at the sale and there goes a smoking deal back to the bank or some larger group…
So when I was activily in the business in Portland Or… I would look at every single property going that month establish a price I would pay and I would have checks ready for them.. Many times I was the only bidder… HOwever to do this you need to go to the sale with easy a million or more in Cashiers checks…. And the bigger players in the US especially the states were auctions are only one day a month.. will have 2 to 5 million cobbled together, and there you are with your 40k and a pocket full of pennies… Not likely your going to beat me or any other of the bigger players…
Far to much time and energy for buying one property and thats what US investors find out after a year of chasing these and never buying one… Listed short sales and bank owned… and or the sweetheart wholesaler that has a pipeline is the way to go… The trick is finding a wholesaler like Alex that only charges a nomial mark up.. As well as I hear TRR is not bad on mark up but very slow on performance of rehab and tenanting so from what feedback I have gotten most investors first year is neg geared for sure.
Right now in Any county in Metro atlanta there will be 30 to 100 bidders its a mad house and very intimidating.
We are working up a bidding service for Atlanta to roll out in September….The purpose is to supply the bigger US investors entering the market…emma171 wrote:…pay the sheriff to do it (I think about $39)… you go back to the Sheriff and say sigh, they haven't paid (interestingly they take your word for it – how bizarre)…and the sheriff will then toddle off down there, do a lock out and you get your house back…Loving it.
We have a variation on this with Gov Sup (eq of sec tenants in Japan – property manager finds one, looks them over, then instead of them signing the lease, pm signs as "tenant" in front of owner – "actual" tenant stuffs up, (late pay is worst, damages literally never occur there) pm pays for their mishaps till they're sick of 'em, then somehow make them disappear. we don't ask. vacant, clean, next tenant enters. easy.Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
zmagen wrote:emma171 wrote:…pay the sheriff to do it (I think about $39)… you go back to the Sheriff and say sigh, they haven't paid (interestingly they take your word for it – how bizarre)…and the sheriff will then toddle off down there, do a lock out and you get your house back…Loving it.
We have a variation on this with Gov Sup (eq of sec tenants in Japan – property manager finds one, looks them over, then instead of them signing the lease, pm signs as "tenant" in front of owner – "actual" tenant stuffs up, (late pay is worst, damages literally never occur there) pm pays for their mishaps till they're sick of 'em, then somehow make them disappear. we don't ask. vacant, clean, next tenant enters. easy.Section 8 here in NC and SC are getting frustrating to use to say the least.
Section 8 is different in each state.
Here in Oregon there is very little of it.
I recall a funny story:
I am down in Gulf Shores MS… with my Oregon Banker looking at a 300 unit apartment that got blasted by katrina.. The ocean surge brought standing water 7 feet deep in all the down stairs units… The entire complex was vacant.
So my banker as this question to the RE broker showing it to us.
He ask’s ” what % of these units are or were rented on HUD Sec 8″
Answer: the broker is a little puzzled and in his nice southern Drawl says well 100% … My banker and I just looked at each other.
In Oregon you may have 5 to 10% Sec 8 at the max same with better parts of CA…Now I am sure it was not 100% but I bet it was 50 or better.
jayhinrichs wrote:Section 8 is different in each state. Here in Oregon there is very little of it. I recall a funny story: I am down in Gulf Shores MS… with my Oregon Banker looking at a 300 unit apartment that got blasted by katrina.. The ocean surge brought standing water 7 feet deep in all the down stairs units… The entire complex was vacant. So my banker as this question to the RE broker showing it to us. He ask's " what % of these units are or were rented on HUD Sec 8" Answer: the broker is a little puzzled and in his nice southern Drawl says well 100% … My banker and I just looked at each other. In Oregon you may have 5 to 10% Sec 8 at the max same with better parts of CA… Now I am sure it was not 100% but I bet it was 50 or better.Could you Imagine a unit like that with All section 8 tenants . The city of Rock Hill put in a nice little projects 22 homes on two roads and make them all section 8 .They got a grant and built the homes now they got 22 homes filled with people just sitting around. now the area is basically a drug invested street with a shoot out last week. So hopefully the city will realize that you NEVER put Sections 8 all together..
Bet Obama Land was the place they received the grant from.
and, because it is the worlds most pro landlord state, we evicted them and rerented the property within the same month… so so simple.
We have a variation on this with Gov Sup (eq of sec You must be logged in to reply to this topic. If you don't have an account, you can register here.
