Posted by Ronald * Starr(in No CA) on April 15, 2002 at 06:52:40:
Joe Kaiser–(WA)---------
Thanks for the details.
May the moss never grow in your hair.
Good Invesing & Good PostingRon Starr***
Bid on this Monday at Sheriffs sale? Help! - Posted by Brian, WI
Posted by Brian, WI on April 13, 2002 at 17:11:53:
There is a 4 family that’s going to be sold Monday morning the 15th at a Sheriffs sale. I just talked with the previous owner (we both work for the city this property is located in) and he said the building is sound, but may need some minor updates. He also said he was getting about $1650 total rents per month and had to pay heat/electric.
I’m not sure of the exact assessment, will check city hall records tonight(one of the benefits of working there I guess), but think it should be about $110,000.
I checked the folder at the County Court house on this property yesterday and saw a total owed of about $118,000, BUT I also called the law firm and got their opening bid which will be $78,188. I explained this to the girl at the counter and she was amazed, owing $118,000 and and opening bid of $78,188 and said that would be a great deal, if there isn’t a second mortgage somewhere and the assessment came out alright. She then did a quick check in her computer and couldn’t find one and again thought this may be a good deal, stating I still would be responsable for back taxes, cuz those don’t get “wiped out” at a sheriffs sale.
After checking with the city where this property is located, they said last years taxes of $2653 are still owed as well as at least 1 prior years (I know the current owner has only had this for no more the 2 1/2 years). So now I’ll be checking with the County Treasurer Monday AM before the sale to find the total amount of taxes owed.
So… Owes $118,000, assessed at about $110,000(not real sure about this number), back taxes of about $5000-6000. Take that with the fact that there doesn’t appear to be any second mortgages and the banks attorney will start the bidding at $78,188, WHAT DO YOU ALL THINK??? I could do a quick flip on it I guess, but will probably hold onto it cuz I own a rooming house about 5 houses to the east of this property.
I think I’ll go to the sale to see what happens, and may even bring a cashiers check for 10% of my max. bid which would be $80,000. Should I get it this sounds like it could be a good deal don’t you think??
The other thing is, the person being foreclosed on still lives in there. When and how do you get him out? Also should I be on the phone Monday morning with an insurance agent and at least get a binder in the property should I buy it?, With the above numbers, what would be a good assessed value for this to work? Or, cuz I’m still new at this, would you suggest I just go, watch, and learn, cuz there will always be more properties that will come along?
Thank you very much for any and all imput.
Brian, WI
And by the way . . . - Posted by JoeKaiser
Posted by JoeKaiser on April 14, 2002 at 20:07:45:
Who’s collecting the rents?
Re: Bid on this Monday at Sheriffs sale? Help! - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on April 14, 2002 at 19:17:36:
Brian–(WI)------------
I’m nervous about this. You don’t seem to know very much about how foreclosure works in your state. That means, to me, that if you buy, you are gambling, not investing.
As JT (IN) points out, you need to have a measure of the fix up cost. You might try to see some part of the inside and certainly should look at the outside to assess the condition as well as you could.
Three units, needs fixing up. I would suggest you budge $12-15K for that work. Now, the price looks a little pooer: $85K on the loan and back taxes plus $15K fixup is $100K for a property worth about $110-$115K. No, not very good.
I like your idea of going to see what happens. I don’t like the idea of you having the money to bid, unless you get one of the occupants to let you see the inside first. Better would be to see at least two units.
And, when lenders start the sale at less than what they are owed, they often bid up, usually to the total they are owed. So don’t be surprised if that happens.
It would be better, in my opinion, for you to leave your money in the bank. Watch your foreclosure market for several months and see what kind of deals are happening. If none are as good as this one, opps, sorry you missed it. But, if many are better than this one, great, you wait for something a lot better than this one before you bid. It is a lot better to miss two good deals than to buy one bad deal.
Good Investing*Ron Starr
Re: Bid on this Monday at Sheriffs sale? Help! - Posted by jeffrey safier
Posted by jeffrey safier on April 14, 2002 at 16:48:08:
why would $118,000 owed and and opening bid of $78,188
be a great deal
Re: Bid on this Monday at Sheriffs sale? Help! - Posted by JoeKaiser
Posted by JoeKaiser on April 14, 2002 at 12:43:56:
Monday may not be the “drop dead” date. If there’s a redeption period, it rarely makes sense to bid at the sale. The smart move may be to get a deed from the owner now and redeem down the road when you’ve got all the facts sorted out.
This isn’t always true, btw. In my area, if the owner redeems, all those “wiped out” liens automatically become “unwiped out.”
Know the rules before you play the game.
Joe
Re: Bid on this Monday at Sheriffs sale? Help! - Posted by linda
Posted by linda on April 14, 2002 at 09:48:58:
The way our records are spread out, I’d never be able to get the tax status in time. Try to check delinquent tax status online - See if anyone has a web address in your county. (mine is summitoh.net)
Good Luck!
Linda
Re: Bid on this Monday at Sheriffs sale? Help! - Posted by Brett
Posted by Brett on April 13, 2002 at 22:35:57:
Brian, just wondering where in Wisconsin you are located? I am in the Fox Cities area and also new to Real Estate investing. I am eager to meet others in the area for possible partners in the future.
Good Investing,
Brett
Re: Bid on this Monday at Sheriffs sale? - Posted by JT-IN
Posted by JT-IN on April 13, 2002 at 18:57:00:
Brian:
This seems like an OK deal. Based on rents, and average expenses, (of course this is a guess, since we do not really know expenses), it should be worth around 110K. If you can buy it at the sale for 80K, plus the 6K in taxes, then this represents about 78% of FMV. Again, this is a rough assumption. Comps would still be better, as to what these 4 units have, and are selling for, in this immediate area.
You did mention that it needs some work… What kind, how much, how expensive…? These are unknowns, and part of the risk of Sheriff Sale property. Be sure that you have factored in these risks.
I would also suggest that you know more of what you are going to do with the property, should you be the successful bidder. You seem to indicate that you may flip it, or keep it… or ? There may not be enough left for a flip, as it is just an OK deal, not leaving super equity to accomodate another investor, unless you find someone dying to become a property owner; and they do exist.
As to the insurance issue… the next call after you call the two or three people that you want to shout that “I bought the property”, is your insurance agent. Get coverage on it right away.
I am assuming that you have yoruself covered from a clear title position, whether through a title search, or title insurance. If you are not sure on this one, then this would be the most important call that you could make. Be certain that you are not buying a problem here. Also, one last concern… Why did this guy lose the property…? There is always a reason, and until you know the answer, how do you know that you are not making this same mistake…? Consider this very carefully.
Good luck on Monday.
Just the way that I view things…
JT-IN
Re: And by the way . . . - Posted by Brian, WI
Posted by Brian, WI on April 14, 2002 at 23:04:56:
Joe,
That is a very good question, I have no idea, but would assume(which I shouldn’t do) the person being foreclosed on who still lived in the property! YIKES!
Thank you and everyone else for their very informative responses. That is what makes this board so wonderful!!!
I’m going to the sale in the morning (leaving the money home as you suggested Ron Starr), and see what happens. If the bank gets it back, I’m gonna see when and how to get it from them A.S.A.P. Any suggestions from anyone on that?
Thanks again
Brian,WI
Re: Bid on this Monday at Sheriffs sale? Help! - Posted by Brian, WI
Posted by Brian, WI on April 14, 2002 at 18:10:38:
An opening bid of $78,000 on a property that is owed $118,000 sounds like a good thing to me, because if the opening bid was $78,000 and I bid $78,001 and got it, that’s what I would have to pay…$78,001 not the $118,000 owed. Everything other then back taxes are wiped out.
What do you think?
Brian,WI
Joes email - Posted by Kent C
Posted by Kent C on April 14, 2002 at 20:05:28:
Joe what is your email addy? Upon “reply” to prev post it does not like the email address.
Kent C
Re: Bid on this Monday at Sheriffs sale? Help! - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on April 14, 2002 at 19:19:51:
Joe Kaiser-----------
I now recommend your foreclosure book in my good books list. I think it is sold, with some advanced ideas.
Now, the rumor mill had it that you were moving to CA somewhere. You talk about redemptions on foreclosures. Sounds like you have moved someplace other than CA. Care to reveal your current location?
Good Investing and Good PostingRon Starr***
Re: Bid on this Monday at Sheriffs sale? Help! - Posted by Brian, WI
Posted by Brian, WI on April 14, 2002 at 04:17:56:
Brett,
I’m in South Milwaukee
Re: And by the way . . . - Posted by JoeKaiser
Posted by JoeKaiser on April 14, 2002 at 23:32:33:
Did you read my post below?
You need to understand if and how redemption works in your area. My first move, regardless, would be to hustle over to the owner and get a deed from him.
It’s a little crazy, but with a deed you may be able to redeem as well as immediately begin collecting the rents.
Now, don’t take my word for it, go figure it out for yourself but do think about my suggestions.
Joe
Re: Bid on this Monday at Sheriffs sale? Help! - Posted by JoeKaiser
Posted by JoeKaiser on April 14, 2002 at 20:13:32:
What was owed has little bearing on what it’s worth. I think that’s all Jeffrey is saying.
You know what jumped out at me about your post? The fact that you told the secretary about this little detail. Brian, it’s little details like this that allow us to make a buck every now and then, and the last thing we like to do is “spill the beans.”
What if the secretary decides something is amiss, makes a call or two and you show up on Monday to discover the bid is now $118k?
Whenever you figure out some hot angle or juicy detail, KEEP IN TO YOURSELF.
Joe
take out the “nospam” part (nt) - Posted by JoeKaiser
Posted by JoeKaiser on April 14, 2002 at 20:16:30:
.
Re: Bid on this Monday at Sheriffs sale? Help! - Posted by JoeKaiser
Posted by JoeKaiser on April 14, 2002 at 20:05:49:
Ron,
Not that it matters, but I moved to CA for only six months, taking a little break from the rat race is all. Toes firmly grounded into the sand, as it were.
I live in Washington State where foreclosures are 98% trustee sales with a rare mortgage foreclosure. Of course, deeds of trust can be foreclosed as a mortgage (through the courts, ie. a lawsuit,/sheriff’s sale) and creditors can execute on their judgements via a sheriff’s sale as well.
Interestingly, new fact brought home a few months ago. There is a little known statute that allows the lender to avoid redemption on a property (it must be shown that the property has been vacant more than six months - winning bidder gets a viable deed at the time of sale). Cool.
We foreclose on a judgment where we levied a house abandoned for years, not months, assuming the law applied here as well. Nope., it only applies to morgages being foreclosed. Grrrr.
Joe
P.S. Thanks for the recommendation.
What about equity skimming - Posted by Tim Jensen
Posted by Tim Jensen on April 15, 2002 at 07:54:38:
Joe,
If someone gets the deed and doesn’t make payments or doesn’t redeem, can’t they get in trouble for equity skimming? Or something like that?
Tim
Re: And by the way . . . - Posted by JohnBoy
Posted by JohnBoy on April 15, 2002 at 01:33:44:
Lets say you could redeem the property after the sale in this case. The lender’s opening bid at the sale will supposably be around $78k. But the actual amount owed is about $118k. So if the property goes back to the lender and you went to redeem, would you get to redeem for the $78k or would you have to pay the lender the full $118k to redeem?