Posted by Ben (NJ) on October 28, 2003 at 06:02:07:
they have a “strict” foreclosure process which means there is merely a court-imposed deadline where the lien is to be paid. If it is not paid, then title reverts to that lienholder, no sheriff’s sale or auction is necessary at all. This is a tremendous advantage to the certificate holder in that if the owner (or mortgage holder, if there is one) can’t pay, it is smooth sailing to ownership of the property.
what was the most amount of money you’ve ever - Posted by MiseryVA
Posted by MiseryVA on October 26, 2003 at 01:52:33:
what was the most amount of money you’ve ever
lost from a dumb deal gone bad?
Did you try to salvage the deal and force make it work somehow
or did you just get sick and tired
and sold it off at a steep discount as a ‘don’t-wanter’?
I am about as burnt as I could get
but still trying to get up on my feet to pursue my goals as a successful investor.
Anyway, misery loves company
so share some of your worst experiences with me
Make Money? - Posted by Martin Greenberg
Posted by Martin Greenberg on October 27, 2003 at 04:10:37:
Are we suppose to make money investing in real estate? I must have been asleep during that part of the seminar.
My first investment was a REO for a quick flip. The deal was thin but I bought the house Thursday and Monday it was under contract. The buyer draged her heels and never closed. With holding costs I lost a couple thousand.
My second investment was a 4-plex I wanted to rezone for an assisted living facility. The place was not rezoned. Emptied the place and did some cosmetic work. Lost five grand.
My last investment was an existing assisted living facility. As a RN, I thought I would combine real estate investing and my RN. Three years later I lost $50,00 cash, my mother put up $100,000 cash and that is ALL GONE. I fed the red ink with credit cards (the residents have to eat and have their medications if they can’t afford them) to the tune of $125,000. My 80 year old mother had to work in the place for a year (ironic, isn’t that?) and fed the red ink about another $50,000. I am filing bankruptcy. My brother is not talking to my mother or myself due to the money mom lost. My business partner is filing bankruptcy too.
The large motel chains came to town after we bought the business and changed the ALF climate in the county.
The conclusions I have drawn are only invest in straight ahead real estate and the hell with old people that can not take care of themself. I plan not to be one of them if I live long enough to retire when I am 75 (because I will have to work that long before I can retire).
Re: My absolute first “deal”. - Posted by StayingAnon
Posted by StayingAnon on October 26, 2003 at 23:52:23:
Income property, needed some work to bring it to full market potential. Seller was an attorney, but at the time, I felt that wasn’t a significant issue. Put 5k into escrow, believing that repairs I felt should be done, would be done. Repairs weren’t done, logistical decision was made to write escrow deposit off, as legal fees would likely exceed the deposit.
That was the last time I lost money on a deal. Everything I look at, in this point in time, is with a “paranoid” viewpoint. If it could go bad, I want it specified and quantified. I think the “bad” one was about ten years ago or so. I always look for the downside, before I ever think about a possible upside.
I don’t contract with attorneys, and I make very sure of numbers. It might be too conservative of an approach, but it works for me.
Here’s one for you - Posted by Mike
Posted by Mike on October 26, 2003 at 19:37:51:
I took a $45,000 loss on a tax-lien property. Bought the certificate from an attorney for $40,000. Wouldn’t you know it the owner actually took me to court to have the deed overturned and she won. Cost me another $5,000 in attorney fees.
This was fairly early in my career at that point. Pretty tough loss for anyone to take and I really thought about quitting at that time. But I made it through and made all of it back and then some.
I’ve also had a few other losses, but by far my deals make pretty decent money.
Don’t dwell on the past. I think of this business like a portfolio of stocks. You will have some losers, get over it. Just make sure you have a lot more winners…and you will if your persistent.
Good Luck.
Re: what was the most amount of money you’ve ever - Posted by Sterling
Posted by Sterling on October 26, 2003 at 18:38:00:
$4,600
We made an offer and it was accepted contingent on our obtaining financing. The offer was on the broker’s form and included a provision that we would pay the broker’s commission should we back out of the deal. I objected to this provision but the broker and my wife persuaded me to sign it. It’s the last time I will ever submit an offer not drawn up by my own attorney.
While the financing was going through we learned that the house was two miles away from an ecological disaster area. It came down to a choice of pay the broker his fee or buy love canal. We paid the broker in installments, a total of $4600.
Re: what was the most amount of money you’ve ever - Posted by phil fernandez
Posted by phil fernandez on October 26, 2003 at 10:44:13:
Have I lost money on a few deals early on in my investing career. Sure. A couple of times I lost about $5,000 on each deal. But that was all offset with deals where I made any where from $15,000 profits up to around $80,000 in profit. But you have to treat this business as if it’s a monopoly board game. And you are playing with monopoly money. Hey it’s only money. And this business is supposed to be fun or why else do it.
So your question should really be turned around to what is the most amount of money you have ever made on a deal. Turn the negative question you ask into a positive. If you are worried about losing money, this business is probably not for you.
Re: what was the most amount of money you’ve ever - Posted by jasonrei
Posted by jasonrei on October 26, 2003 at 08:47:12:
I rehab SFRs, and all have been good profit deals. This year I picked up 3 multis. I bought this one for 100k that needs about 70-90k in repairs. It’s a fourplex, and I overestimated rents. Anyway, I’m going to break even on the front end of a deal that’s going to take a LOT of my time. I’d probably be able to sell it and net zero.
Upside is that 10 yrs from now I may have $300k in equity.
So that’s it. 40 properties or so in a little less than 2 yrs, and only one I regret. Looking back I see how I SHOULD have handled my deals, and I realize that inexperience cost me well over $50,000.
Focus on the positive - Posted by Helen
Posted by Helen on October 26, 2003 at 07:23:19:
Believe me, I’m sure we’ve all gotten our bruises and expensive seminars from life, BUT what we focus on most is replicated in our lives. Difficulties and how we’ve conquered them might be more productive.
Seems that I’ve got it down “pat” on negotiations, getting the deed and even negotiating owner financing, with no down payment and no payments for six months. However, I can’t eat equity, I can’t pay bills with empty houses and for various reasons can’t do the refi’s to get the cash out. Guess what! I’m having a frustrating time selling with owner financing. This weekend I’m reflecting on what I’ve been doing, what I need to change, and how I will go forward. Maybe it means that nasty word…J.O.B.
Why are you so burned? If you tell us the issues, we may be able to offer some help.
Endeavoring to persevere,
Helen
Re: Make Money? - Posted by JD
Posted by JD on October 27, 2003 at 08:24:29:
About 4 years ago I converted a 10 bed ALF back to a 4plex. I looked at the ALF market at the time, I came to the conclusion that the economies of scale would make a small (
Good entrepreneurs are not - Posted by rm
Posted by rm on October 27, 2003 at 18:13:03:
risk takers,
they’re risk MANAGERS/mitigators.
Paranoia is healthy in this arena.
Like a rolling deed - Posted by Hank FL
Posted by Hank FL on October 27, 2003 at 23:20:28:
How did she get the deed overturned ?
Confused… - Posted by Ben (NJ)
Posted by Ben (NJ) on October 27, 2003 at 07:06:29:
here in NJ, even if the foreclosure is overturned the property owner is still obligated to redeem the certificate (which includes principal, accrued interest, penalties and legal fees). How did you wind up losing your ENTIRE investment?
Re: Focus on the positive - Posted by Scott
Posted by Scott on October 27, 2003 at 21:37:27:
Actually, I am learning just as much from the horror stories as I do from the amazing stories. If someone were to write a book made up of nothing but war stories from people just like yourselves, I would study that book till the pages wore out.
The serious beginners will learn from your mistakes, not run away. If they run away, then perhaps this was not for them in the first place, and you probably just saved them thousands of dollars.
Keep those cards and letters comin’!!
Thanks!
Re: Confused… - Posted by Mike
Posted by Mike on October 27, 2003 at 09:09:15:
Ben,
The same is true here in Illinois. Suffice it to say, I way…I mean WAY overpayed for the certificate. The owner only owed about $3,000 in back taxes. So, I did get that amount back plus some other incidental fees.
Bottom line is that after all the smoke cleared, I ended up losing around 45k.
Lesson learned the hard way on this one.
Re: Focus on the positive - Posted by Helen
Posted by Helen on October 28, 2003 at 07:07:54:
Touche’ you are absolutely right. We all learn from others mistakes and our own. Maybe I was just “preaching to the choir I’m singing in”.
Good investing!
Re: Confused… - Posted by phil fernandez
Posted by phil fernandez on October 27, 2003 at 10:04:29:
What was the thinking paying $48,000 for a $3,000 tax certificate. Or did you think the back taxes were $48,000.
Let me speculate… - Posted by Ben (NJ)
Posted by Ben (NJ) on October 27, 2003 at 11:21:45:
the closer a certificate gets to foreclosure judgment the more valuable it becomes. At that point sellers expect a substantial premium above redemptive value. By the time Final Judgment is obtained, lienholders (now the owners) are getting close to FMV for the property. It looks like Mike paid a big premium for the certificate knowing the foreclosure would occur but not thinking it would ever be vacated. A sharp attorney would have
looked over the foreclosure paperwork with a fine tooth comb for any service deficiencies and even then had some contingencies in the assignment paperwork in the event the judgment got vacated within a certain period of time. A painful lesson indeed!
Confused too - Posted by Hank FL
Posted by Hank FL on October 27, 2003 at 23:18:09:
I don’t know much about this tax certificate stuff, but are you saying that the lienholder in this case would be the “owner” right after final judgement rather than the auction ?
Thanks Ben nt - Posted by phil fernandez
Posted by phil fernandez on October 27, 2003 at 14:51:10:
nt