Buying Tax Liens

Today and for the next few weeks, I want to focus on some revenue streams for real estate investors.    There are many ways to make money in real estate besides buying, renting, and selling houses and real estate.    Today, I want to focus on purchase tax liens.   Let me qualify what I say as I begin by saying that I have never purchased tax liens though I have been to a tax auction and do not consider myself an expert in that real of real estate investing.

As I am sure you know,  all government enitities levy taxes against their citizens.  These tax monies are then used to pay for community infrastructure (e.g. roads, parks, water lines, etc.)… schools… and social programs (e.g. food stamps, etc.)     One of the ways that the government receives tax money is levying taxes on real estate.   When taxes are not paid on real estate, the government has the right to seize the property.  (As an aside, my Dad was a city tax collector for 7 years many years ago and I can recall him doing that.)    Though the way that delinquent property taxes is dealt with differs from state to state, one of the ways that some states is deal with  delinquent property taxes is through having a tax sale.   At this sale,  the audience have the chance to pay the taxes on the property to the government.  In return for paying the taxes, the successful buyer receives interest that is paid by the property owner once they finally pay the taxes.

The counties of the state of South Carolina have delinquent tax sales usually once a year.   (You can check out the website of counties for more information.)    At the tax sale, the person that bids the highest amount for the taxes due pays the taxes to the government enity.  The property owner has up to one year to pay the property taxes.  The amount of interest they pay depends on when they pay the property taxes during that year.  If they wait to 9 to 12 months after the sale, they will have pay 12% in interest.  Though in South Carolina you do not have access to the real estate during that period,  you do receive up to 12% interest on the money you have paid for the taxes.   This is a good, safe investment for real estate investors to invest their money.    There is one caution, however, to real estate investors:  make sure you do “due deligience” on the property you will seek to pay taxes on.   

On the internet, there are a number of web sites that will give you more information.  You can also check with your local county tax office for more information.  Happy buying and selling.--  Randy Wall, Lora Lee Properties 

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A Secret Key for Buyers and Sellers

 

One of the things that makes real estate so fascinating to me is there are so many facets to it.  Whether you are a real estate buyer or seller, real estate of course is about the numbers—purchase price, cost of repairs,  after repair value, etc. Of course you have got to find a way to buy the property either through cash or terms.    But there is something else that is critically important that is just as important that few people talk about and it is this:  YOU WILL BE MOST SUCCESSFUL AS A REAL ESTATE BUYER AND SELLER ONLY BY BUILDING RELATIONSHIPS.   

You need a computer to read this blog that I am writing for the internet, but real estate is not about having a relationship with a computer mouse, but having a relationship with people.    If you are a real estate buyer, get to know the motivation of the seller.  Granted, they might be looking to sell a property but what is the “why” behind their sell of their property.    Are they looking to move into a bigger or smaller house?    If so, that might give you the opportunity to sell them a property.    Are they looking to retire?   That might give you the opportunity for owner financing.    Build a relationship with your seller.   

A fellow real estate investor recently told the story about being contacted by a person that was trying to sell a house.    As the investor got to know the seller, they discovered that the seller was preparing to move into an assisted living center and did not need to receive any cash for the property.    As the investor got to know them further, they also discovered that the seller liked coke and candy.    My fellow real estate investor bought a house literally for the price of two 12 packs of coke and two bags of candy.    That deal would not have happened except for the fact that my investor friend got to know the seller.   

Again, whether you be a buyer or seller get to know the person and build a relationship with them.    Now, go buy or sell a house.-   Randy Wall, Lora Lee Properties

Finding the Right Mortgage Lender

Today, I want to focus on working with a mortgage lender on a house purchase.    There are only two ways to buy a piece of real estate:  cash or terms (financing).     Unless you have a rich family member or a very good friend with lots of money, most persons buy their personal residence through financing found in a mortgage lender.   Here a few tips I have found in working with a mortgage lender:

INTERVIEW  POTENTIAL MORTGAGE LENDERS-    Most people will “shop around” at different car dealerships before buying a car or go in different stores before buying clothing.  When you consider spending potentially hundreds of thousands of dollars, it makes good sense to look around before deciding who to use as a mortgage lender.    While it might be tempting to simply ask about what is their interest rate and what will be your monthly payment, ask many more questions.    Ask them about how long they have been in the mortgage industry.  After you tell them what kind of property you are interested in buying (e.g. single family home, condo, mobile home, etc.)  find out details about whether they finance those types of property and what their mortgage requirements are.   If you need to do renovations on the property, check to see if you can finance those in the home purchase.   

GET YOUR FINANCIAL HOUSE IN ORDER-    Mortgage lenders are going to want to know information about you and your proposed purchase before they make a decision about loan approval.    Be getting this information together and organized.    This information will include the following:  W-2 information, 1099 copies, recent bank statements,  tax returns for 2 years,  an asset/ liability statement,  verification of employment,  etc.   If you have this information together before you talk to the mortgage lender, it will expedite the process.   Once the potential lender sees your credit score, they may have other questions or concern.     If they offer advice on how to improve your credit score, listen and follow it.  It is to your benefeit to have a higher credit score because it can help you get a lower interest rate on a loan. 

PROVIDE INFORMATION WHEN THE LENDER REQUESTS IT-    While every prospective home owner is anxious to get loan approval and to get in their new home, you can assist in the process by getting information to lenders in a timely fashion when they request it.    As you need to do your “due diligience” in purchasing a house, the lender today will do their homework about you, your credit worthiness, and about the property you want to buy.    Get the information to them as soon as possible.

Good luck in your home search and working with lenders.    Happy buying and selling.-  Randy Wall, Lora Lee Properties 

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THINGS TO DO ABOUT YOUR HOME

We are in the month of November now.Though it is hard for me to believe, 2012 will be over in a couple of months.As we approach the end of the year, here are a few things I encourage you to do whether you be a seasoned investor or a homeowner of your own home:

CHECK ON YOUR PROPERTY INSURANCE COVERAGE-Many of us have seen the sight of damage that persons suffered on their homes from Superstorm and Hurricaine Sandy.That should be a good motivator for all of us to make sure that we have adequate insurance coverage on our property.Talk to an insurance professional about whether you should consider getting flood insurance.If you live near a river, lake, or other body of water it is something to consider.Do you have an adequate up to date inventory of your personal belongings and enough contents coverage? Do you need to change the amount of insurance coverage on your home?

BEGIN GETTING YOUR INFORMATION TOGETHER FOR TAX RETURNS-I know quite well that many persons procrastinate on doing their tax returns.Before you get into the heart of the Thanksgiving and Christmas holidays, start now to get together information you will need to do your tax return.Though I am not a tax professional, there are some tax deductions that real estate investors and homeowners do have if you own real estate.Check with your tax professional about that.This also might be a good time toget organizedon keeping up with all your expenses.There is some very good and inexpensive software like Quicken thatcan help you keep up with how you spend your money personally and in your real estate business.

PROPERTY TAXES-Property taxes for most cities and counties are due around the first of the year.Unless you bought your home recently, you should already have your tax bill.If you not have it, check with your local tax office.If your taxes are paid out of esgrow with your mortgage lender, make sure the lender has a copy of the tax bill.Even though they might directly pay the bill, you as the homeowner are ultimately responsible.

These are a few things to take care of in the last weeks of 2012.Do you have others that you would suggest to put on our “to do” lists as we end the year?--Randy Wall, Lora Lee Properties

CONDOS: ADVANTAGES AND DISADVANTAGES

Today, I continue my series of blogs on other types of residential properties other than single family residential houses.  Last week, I focused on mobile homes.  Today, I focus on condominimums.    Like any property, they have advantages and disadvantages.    You will find a few below.

Advantages of condominimums are as follows:

MAINTENANCE AND UPKEEP-  A condo complex is usually run by a Home Owners Association (HOA).  While you are responsible and control what is inside your condo, the HOA controls every thing that happens in the  common areas.  Therefore, the        HOA will usually hire someone to do maintenance and upkeep on  the buildings and grounds.  In exchange for this, the HOA will normally charge HOA dues.    This can be a great advantage to someone who does not have the time or inclination to such home projects, or who does a lot of travelling and cannot be there to care for the exterior of their property.

AMENITIES-  Many condo complexes will have amenities present that are appealing to homeowners and renters.  I have owned condos that have had the following:    pools, lazy rivers, tennis courts, indoor pools, outdoor pools, hot tubs, docks, etc.    If you enjoy having such amenities, perhaps a condo is for you.

ALL INCLUSIVE FEES-    Another advantage of condos is that you pay through the HOA dues fees that would you would be billed separately in a single family home.   These fees would include the following:  recreation fees, property insurance.

While there are advantages of condos, there are also some disadvantages that mirror some of the advantages:

LIMITED YARD WORK AND GARDENING-   There are limited opportunities for yard work and gardening for condo dwellers because the grounds are a part of the common areas.  If you enjoy planting flowers, bushes, vegetables, etc, and maintaining the same a condo might not be a right choice for you.

CONTROL OVER PROPERTY-   As stated previously, the HOA or property  management company fired by them controls many decisions around a condo complex.    If you enjoy making decisions about what color of siding to have, make flowers or bushes to plant, etc.  then a condo might not be the best choice for you.   

CASH FLOW-   As a real estate investor,    one of the disadvantages of a condo is that it stifles your cash flow because you have to pay the monthly HOA dues.     If you are buying a condo with the plan to rent it, then look carefully to see how the cash flow will work for you.

These are a few advantages and disadvantages of condos.    What do you think?-    Randy Wall, Lora Lee Properties 

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