I'm thinking about ordering "Houses for $300.00", what do you think?

I'm not familiar with the book. I'd guess that it is a book that teaches you how to buy tax liens and tax deeds. I don't invest in tax liens, so I haven't read up on it. Basically, if a book is reasonably price (i.e., $50 or less) I'd say that you should probably just go ahead and get it. But better than that is to start off at the local library - read what they have and use their inter-library loan system if they have one.

I don't think that its smart to buy books for more than $50 unless you know that the book will be useful. For instance, I've paid up to $200 for books in the past, but those books were highly recommended by competent investors. If its a shot in the dark, save your money - there are just too many bad RE books about.

If everything else about a tenant looked good - would you take one that admitted to suing a previous landlord?

The only more details I have at this point is that she sued him because "he was a bad landlord". Obviously not nearly enough to go on.

But would you even consider renting to this tenant?

never, especially never when you don't immediately get some kind of reasonable answer.

Anyone have any experience with MIT's Real Estate Development program? Either through friends or personally? I am contemplating applying for next September ('09) as it is essentially right in my wheelhouse for what I am interested in. Didn't know if anyone here has any experience first or second hand with it.
~Justin

It is a "complete system" from one of those paid program adverts on T.V. The hook is that, yes, you can get a house for paying the tax. "There are government programs that allow you to buy houses for $300.00" give or take, , whatever the taxes, "no matter how much is owed on the house." If I thought about it, I'd think sounds like a job for a lawyerly type, involving a lot of law suits. And if someone does completely abandon a house b/c they can't even pay the taxes, I'm sure cleanliness and maintenance of the property was not on their list of priorities either. I can't remember the cost of the system? Can you get a house "free and clear" by just paying the taxes as this T.V. Ad claims, sometimes, always, never without a lot of hassle?

Nope. Not in a million years.

Yes, this can be done. Basically, a tax lien takes precedent over every prior lien. Normally you would buy the lien at auction. You are not bidding on the purchase price - that is set at the amount of back taxes owed. You are bidding on the interest rate that the debtor will have to pay you to get you to remove your lien.

So say that you bid on a $3500 lien. You bid the lien down from 25% to 15% and win. What happens depends on the state, but basically you get title to the property. However, the debtor has a right of redemption period where he can pay you back the $3500 plus 15% interest. Normally the right of redemption period is 12 months, but in some states its 24 months.

If the debtor never pays the lien off during the redemption period, you own the property. The VAST majority of the time the debtor will pay the lien off. Since you've got a tax lien you get to skip in front of any mortgage holders, its a virtual certainty that any mortgage holder is going to pay off the lien (plus interest) and foreclose on the property.

So very rarely will anyone actually own a property by investing in tax liens. However, what you can do is get a very decent ROI on your money invested.

IMO, tax liens are great. If I were starting off today, I'd probably sell used mobile homes. After I met some investors that wanted to do passive investing, I'd borrow money from them at 12% or whatever and go out and get some 18% liens with the cash.

NOTE: I'm not anywhere close to an expert in tax liens. In fact, what is above represents just about everything that I know about investing in them. FWIW.

To answer your other question. I don't think its smart to buy RE information from TV ads. Just about everyone I know that has done that has regretted it. Normally you'll get called constantly to buy more REI materials. Plus, if the materials were so great they wouldn't have to hard-sell them on TV ads. Spend some time online researching what the best materials are. Find some forums that discuss that topic and see what the regulars recommend.

What reason would you use in rejecting the application if everything else checked out fine?

"you sued a previous landlord"

Just make sure to be consistent and reject ALL applicants that have sued their previous landlords. Although if you get more of them, maybe re-evaluate how you are advertising the property.

I have even read of landlords that refused to even rent to Lawyers. Since lawyer is not a protected class and if you get a lawyer in there its very easy for them to manipulate the system and drag out an eviction for years if they wanted to.

You don't have to give a reason. Just tell them that they didn't pass the screening process. If they ask why just say that you don't give out that information.

What you need to do is sit down and type out your criteria for renting a property. Be sure to date it. If you decide to add a criterion, just add that to the list and date the updated copy. KEEP BOTH COPIES. Having a clear and concise definition for who will qualify will go a very long way if you get sued for discrimination.

having the loan contingency (usually referred to as finance contingency) in the contract for the length of the contract is standard...not the exception

I've never done a purchase without it...and I've never sold to someone who didn't have it set up for the full time

(although I have seen some ******ed contracts in my time and have seen some without...but those are usually by n00bs only...I'd go as far to say if someone didn't have it in there I'd probably look at them funny/not take them as a serious investor)

Are pre-foreclosure homes free of all burdens?
Are auction homes free of all burdens?

Pre-foreclosure: No, they have at least the mortgage attached. They are --Pre-- foreclosure which means that they are properties that have not yet been foreclosed upon but are likely late in payments.

Auction homes: depends on the auction type.

Spex:

I am looking into buying a duplex while living on one side and renting out the other. While I have always been interested in getting into real estate investing, this is not the primary reason I would buy one. I am interested in getting a duplex because it will actually be possible to live in neighborhoods that would otherwise be out of my price range. The particular neighborhood I have looked at has three private schools in the area so it would be no problem to keep the other side rented even with somewhat expensive rent (1,100-1,200 for 2 bdrms).

I would also be having a friend rent from me on the side that I would be living on. I do not have a lot of cash, so I would probably be only putting down 3% and getting an FHA loan, but I am ok with having some out of pocket expenses each month as I will be living there as well. The only thing that concerns me is I am one year out of college and not sure exactly what my long term future would be. I like the area and would probably always stick around there, but may decide at some point I want a traditional home. How much should I worry about getting this duplex for a price that would allow it to cash flow? I know the value of the house will be tied to the rents I am able to receive, but it seems like so many people buy places that don't cash flow or are break even. I am concerned that if I ended up having to sell in 4-5 years I could have trouble getting what I have into it.

IMO, you should wait until you're in a spot that you plan to stay in long term. Buying a property is an investment. Its not something that you do for fun or because your uncle said it was smart. When you make an investment you decide how much to pay, how long to hold, and most importantly how you plan to make money. It sounds to me like you don't know how long you expect to hold or how you plan to make money. I'd say pass until you are more settled.



You should worry supremely about getting the duplex for a price that will cash flow based on today's market rents. If it doesn't cash flow, don't buy it. Period. Good rental investment properties cash flow. When you buy properties that cash flow you are protecting yourself from serious future financial difficulties.

Spex.
I am a college student in Grand Rapids, MI. I was about to ask a question pretty much identical to the last post. But having read that I can alter mine a little to make it most relevant to what I am looking to do.

I am currently renting out an apartment for 600/month. I don't have much cash in savings. I have no debt. I have little/no credit. Not bad credit I am just only 18.

My goal is to purchase my first property within 6 months. Either a 2-unit or a 4-unit. Probably a 2-unit though as I work full time so managing tenants might get a little hectic. So assuming I spring for a 2 unit. Here are my questions.

How much cash do I need? I am going to have to save it so just an accurate guess. I am not thinking a no-money down thing will be best. I am just talking about buying a potentially cash flowing property. Renting out 1 side. Living in the other side.

My problem has been I am stuck in the thought of well I don't have enough money to buy. Or enough credit. But i am figuring if I'm paying $600/month rent. I could probably afford better to have that go towards equity in property than my landlords bank account.

On the same note I may be relocating to about an hour away in 2 years. Where I would then want to rent out both sides. and maybe kill my cash flow with a property manager. But if I can finance it right where my payments aren't too high. Then I am thinking that I won't be in too bad of shape with it going to a property manager.

I would really value your thoughts on this. Also, If my idea is pretty far-fetched or dumb a reality check would be fine too. Thanks,

Jordan

Ive done a bit of reading and leeched onto a fairly successful REI over the past few months. I dont know a whole lot at this point, but I have the basics down and Ive been looking for a spot to jump in.
My question is about financing. A friend of mine got started a year ago trying to flip a house. Ended up not being able to sell and now hes renting it out and barely covering expenses with a ARM that moved up to like 9%. Hes already done all the repair work and has a good tenant thats signed through next year. He cant get refinanced. I figured if I went in on it with him, it could get me started and get him out of a bad spot. If we turned this around a bit we'd both be in a spot to start looking for more properties.
So far weve been turned down completely from our mortgage broker. Hes got two mortages (his house and the rental) and hes cash light because he threw it all into the repairs. I work at a bar, so on paper I make about 20k a year, but I have almost 40k in cash. Im also already in a 150k mortage with my roomate. We figured with my cash on hand, and his W2 income (about 50k) we could get refinanced. But I guess the bank sees it as his lack of cash and my lack of income.
Weve gone through a short list of other potential investors, who either didnt want to do it, or didnt help us as far as getting us qualified. So were pretty much out of people we actually know.
Any suggestions?

Here's a possible ridiculous question: Why do people never buy investment properties with 100% down? It seems to me like it would be a low risk way to net somewhere between 2-10% annual return doing this.

Hypothetical example 130k property, that can rent at $900/month, earns 10800/year. This would net a ROI of 8.3% annual. Factor in taxes, everything else, maybe this would bump it down to 4%? And would the possible appreciation of the property also factor in?

Would like to hear spexs response to this as i often wondered this myself.

The fundamental reason is, as long as you can borrow money at less than that return you will make a higher ROI by leveraging yourself up and say buying 5 similar properties with 20% down. In your hypothetical, if you could borrow at 7% you would put down 26k, pay 7280 in interest and make 3520, producing a much better cash-on-cash return of 13.5%. If you choose your properties well you can eliminate most of the risk associated with the leverage.

Moreover, 8.3% really isn't that much in the RE world, leverage or no leverage. You have to do work as a landlord so you need a higher return to compensate yourself for that. Also RE is less liquid than other investments and therefore requires a higher return to justify the liquidity risk. You will definitely run into unexpected costs or problems. Your tenants may walk and you have an unrented property for 6 months or more. So for all these reasons you want to get higher ROIs on your investments, otherwise if things don't go perfect your RE investment portfolio may struggle to tread water.

Because I can buy 4-5 130K properties with the 130K.

I'd rather have 4-5 somewhat leveredged properties than 1 unleveredged.

So you've got a friend that made a bad investment and your plan is to buy into that bad investment? Sounds like you need to think this through.

Plus, you should declare more of your income. It was mistake to hide so much. You'd likely qualify for a loan if you had declared more.

Hi sry if this question is off topic
im 19 years old and I wanna learn real estate should I go to college
I dont think I want to because of the time I put into poker and I am just really getting my bankroll of the ground so say I dont whats the best way to learn real estate. list of books i should buy etc...

thank you I will def b going over this thread when i can understand it