taxsaleproperty.org

Tax Sale Forum => Introduce Yourself => Topic started by: nomzero on May 29, 2014, 02:58:19 PM



Title: New kid on the block looking for some help and advice!
Post by: nomzero on May 29, 2014, 02:58:19 PM
Good day to all.

I am a new "wanna be" tax sale investor who has been following the tax sales for a while now. Discovered this goldmine of a website recently and jumped for joy.  :)

I have a few questions about some recent experiences I have had with regards to attempting a tax sale purchase. More specifically the recently concluded Hamilton tax sale where 67 Park Row N and 978 Hwy 5 were the top contenders (for obvious reasons). Both got cancelled.

We have 20% down (deposit) + some extra for other costs and approached our bank (TD) to procure financing. After getting all info about tax sales (no appraisal possible etc.) we got a big fat NO! Blanket pre-approval for non-tax sale property was done though!

Approached Home trust  for it's 'B' products on the advice of bank and mortgage broker. What an awful experience that turned out to be. Bad interactions with "underwriter". After hearing the tax sale deal and 45 minutes of explanations he says "I don't FEEL like approving this mortgage!!!"

So, now the big question.

Where does one go for financing?
I am looking for specific names and contact details please. Private lenders (Companies or individuals) who will not shy away from a viable tax sale.   
I reside in the Greater Toronto Area and am very happy to drive most anywhere.

Any other advice on do's and dont's is very very welcome.

Looking forward to learning more and finally making the leap to "bought" instead of standing in the sidelines.


 


Title: Re: New kid on the block looking for some help and advice!
Post by: pjdd on May 29, 2014, 03:45:28 PM
Welcome to the board....I think if you read previous posts from the pros such as Frank/Dave2/g20/20/Netpred  (buy the way where is he???)/and many others you will learn a lot of valuable information. I have been doing this for about four years and have secured 2 properties and trust me it is not easy.

You have to do a lot of research/leg work and accept ALOT OF DISSAPPOINMENTS along the way from financing/tax sales/etc  to leap into this. The market is crazy right now (read previous tax sale on Rushton Road Toronto) and of course the MLS in Toronto is INSANE ::) much like Tax Sales unfortunately....

Good luck..


Title: Re: New kid on the block looking for some help and advice!
Post by: Jayz on May 29, 2014, 05:02:56 PM
Don't tell the bank it's a taxsale. Tell them it's a private deal and access to the property for appraisal is impossible for some reason until after closing. I tried once but the sale got cancelled before I could hear back. I didn't follow up so I don't know if it could have actually worked out or not. Although I seriously doubt it, if somebody had success in getting conventional mortage on a taxsale, please share. I helped a friend earlier this year secure a property deal, the seller then tried to cancel the deal but the firend didn't let go so access to the property was blocked by the seller. It turned out this friend had to come up with all cash (close to a mil) because no bank could give him the mortgage due to no-access for appraisal dispite the fact the property could be (later proven to be) worth way over the purchase price based on comparasion and info available. So, no-access is the hardest part.

Maybe I should get into the business of arranging private loans for taxsale fellows. Discount is available for members of this board.  :D


Title: Re: New kid on the block looking for some help and advice!
Post by: paris on May 29, 2014, 05:21:06 PM
Buying a tax sale is really taking your chances. It would never occur to me to borrow money to buy one. I guess I figure if I have to borrow it, I can't afford to take the chance.


Title: Re: New kid on the block looking for some help and advice!
Post by: pjdd on May 29, 2014, 05:34:45 PM
Sorry guys 8) for I may have worded it wrong on my previous post...when it comes to financing I always have paid cash I would never go to the bank for financing on a Tax Sale they will laugh at you especially now, if you don't have the cash this is a hard game to play..


Title: Re: New kid on the block looking for some help and advice!
Post by: Frank on May 30, 2014, 05:34:11 AM
You are getting some very good advice here.

All too often we see newbies who don't have the financial means to close.  If you like to gamble buy a lottery ticket....much cheaper and you could win. 

Most tax sale properties are or at least can be severely tainted...and that's why you won't get financing.  Even if you had just enough to close, do you really want to risk your life savings...your kids education...on something that can backfire.

You have to pay to play....if you can't pay then don't play.  Sounds harsh but that's the way it is. 8)


Title: Re: Cash is king for Tax Sales
Post by: Dave2 on May 31, 2014, 07:33:46 AM
if you don't have the cash this is a hard game to play..

Unfortunately you need capital to play in this business.  But you can play it on a shoestring and build up your capital if you have the right strategy, start small and choose your spots.  

Spending capital starts right at the beginning in the research phase which may require you to do several title searches not just on the property being sold but also those in the immediate neighbourhood.

The most recent one I did over a dozen in the area of the property(s) up for sale. This led to some unusual conclusions

a) Increase the value significantly of the bid or bids to get all the property(s).
b) Do not buy the second place bid of a certain bidder who I also expected to bid as I worried about getting stiffed.  

The real expense comes post tax sale.  

Needless to say most tax sale properties are not in good condition at the time of the sale.  You have to spend money to get the proper price on resale if that is your goal or use for personal reasons. If you do your homework ther are a lot of people who will try and steal the property (see photo) and you need capital to wait out until the proper buyer comes along.  

As I say any idiot can buy tax sale properties the key is can you resell it for a proper profit.  This takes longer then people realize as in one case it took 25,000 hits before I sold it.  

No one has infinite resources though and maybe I will have to take someone up on his offer of a private loan.  I wonder if he and the pretty girls he has been known to hunt tax sale property with (which is an interesting strategy particularly in summer for inspection which I could have used this time last year when the occupied dwelling brought out the german sheppards) like ice cream.   ;)


Title: Re: New kid on the block looking for some help and advice!
Post by: drago408 on June 02, 2014, 05:42:55 PM
Trying to get financing for tax sales properties through banks is extremely difficult if not impossible.

I have come across one Toronto based mortgage broker who does have experience with Tax Sale properties, "Son of A Broker", if you google it, it will go to his website.

But as members of this board have said, cash is best.



Title: Re: New kid on the block looking for some help and advice!
Post by: nomzero on June 04, 2014, 09:39:47 AM


Thank you all for sharing important information. I have learned much in just these posts.

I am not entirely discouraged and will change strategies to affordable investments instead of not.

Spoke with "Son of a broker" and the he lends against equity in your principle residence.

Thank you all again. Much appreciated.



Title: Re: New kid on the block looking for some help and advice!💲💲💲💲💰💰💰💰💰
Post by: g2020 on June 04, 2014, 02:22:14 PM
If you have equity in your home just go to any bank and get a low interest rate line of credit - that is what I did when I started out. You then just pay interest on the amount you need, and then when the municipality sends back your deposit, you just pay down your line of credit. If I got a property I would draw on the line, and then when the property was mortgaged or sold, I would just apply the proceeds to reduce the line of credit. I am not suggesting that you go over your head but responsible use of other peoples money can make sense when you use the borrowing to earn income. The interest on the line of credit would normally be tax deductible, unlike your mortgage, so any spare cash would be used to pay down the mortgage - the next thing you know the mortgage is gone and your only debt is tax deductible. 💰💰💰💰💰💲


Title: Re: New kid on the block looking for some help and advice!
Post by: Frank on June 04, 2014, 09:28:04 PM
G2020 is bang on with the homeline credit line. 

Having the wherewithall to make a purchase doesn't mean that a smart investor is going to cash in on his bonds, mutuals etc...or sell property short just to make a bid on a tax sale property.  Use the equity you already have in your home to give you the liquidity to make these snap purchases....without begging for funds....that is provided you have equity.  But remember never to gamble with your kids education funds.  8)  I never go into a casino with any more in my pocket than I am willing to lose.


Title: Re: New kid on the block looking for some help and advice!
Post by: Dave2 on June 08, 2014, 09:26:35 AM
G2020 is bang on with the homeline credit line.  

  Use the equity you already have in your home to give you the liquidity to make these snap purchases....without begging for funds....that is provided you have equity.  But remember never to gamble with your kids education funds.  8)  I never go into a casino with any more in my pocket than I am willing to lose.

Sorry but I don't agree with you guys.  Like kids education; home equity is not something I touch, even when I am tempted.  


Tax sales are too risky and there is always something unexpected that can even trip up a sure thing.  Look at the Belmont Stakes race yesterday, a sure bet; California Chrome, got an injury.

My viewpoint is never make your bet with borrowed money.  When you have your win with your deeds; and have time to confirm your initial assessment, then you can borrow money against the property.  Ideally some or all of that loan is made against house money.  

When you have the property you can really take the time to find what you may have and if there are an pleasant surprises.  

Its like the owner of the California basketball team who was forced to sell the team.  He is laughing.  

"A quirk in the tax code ? Section 1033 to be precise ? allows you to defer taxes when your property is taken involuntarily. Sterling can logically argue the Clippers sale was forced on him by the NBA. The reason is irrelevant and not covered by any tax laws. If, within two years, Sterling were to invest the money in similar or related fields, those investments can be set off against tax"  That is a saving of $264 million dollars.

I know I miss some opportunities with that philosophy but I also can sleep at night. I am prepared to argue that philosophy with g2020 or  8) anytime.


Title: Re: New kid on the block looking for some help and advice!
Post by: Frank on June 09, 2014, 06:09:12 AM
Dave...how can you equate me with that asshole millionaire. 

I have successfully used my home equity to give me liquidity.....that is my point, and I don't gamble with money I can't afford to lose.

The kids education reference is for the young folks out there who are thinking that they will strike it rich by risking their kids future. 

My kids are all grown, educated, and off my payroll so that is not an issue for me....if I don't spend it, they will some day.  8)


Title: Re: New kid on the block looking for some help and advice!
Post by: Dave2 on June 09, 2014, 10:52:18 AM
Dave...how can you equate me with that asshole millionaire.  

I have successfully used my home equity to give me liquidity.....that is my point, and I don't gamble with money I can't afford to lose.

My kids are all grown, educated, and off my payroll so that is not an issue for me....if I don't spend it, they will some day.  8)

1.  I still disagee with you and G2020.  

2. It was not my intent to imply that, as I like the guy probably less then you do.  I was illustrating the event; not the person which if true, is something that people would have taken more care to avoid him getting an unexpected benefit that he did not deserve.

The point I was trying but obviously did not make successfully is that post tax sale, we sometimes find unexpected events and they can be positive as well as negative like an unexpected cottage, you know  I once got.

3. Where I disagree with you both is that we are talking about advice to a new bidder.  I rate you personally as one of the most dangerous; if not the most  dangerous competitors on this board, so much so I go out of my way to avoid competiing with you.

The bottom line is your risk profile as a result is much lower then most bidders on this board myself included.

4. You yourself said that you can afford to lose home equity but there are a lot of people on this board who can't.   .

5. I play the game somewhat differently then you and G2020 reflecting my lower level of knowledge and experience.  Maybe someday I will be at that level.  But until then I will finance post tax sale when and if I win something not pre tax sale out of money I should think long and hard about losing.



Title: Re: New kid on the block looking for some help and advice!
Post by: Frank on June 09, 2014, 05:49:46 PM
Dave

You obviously still miss my point.  I am not gambling with my home equity.  I have other reserves, but those are wisely invested and cannot become liquid on short notice without other costs being incurred.  I simply use my home equity to achieve a level of liquidity to enable me to play without having to pay the costs to acquire the funds which are already mine, but I do not want to realize on them if the investments are in fact yielding returns.  Tax sale properties are most often short term investments, and I don't want to jeopardize long term investments for their sake.

Do the math.  8)


Title: Re: New kid on the block looking for some help and advice!
Post by: PG on June 10, 2014, 07:39:36 AM
I agree with Frank and Dave, whole heartedly!

If you don't have cash or access to cash through lines of credit, then you are not yet ready to play this game.

Case in point: Three years ago, when I was new to this website, I read through all posts and saw a posting where someone had successfully gotten the bank to finance a tax sale. I eagerly and foolishly thought that I could do the same. I even had a nice banker at a major (blue and gold) bank with a lion as its emblem assure me that I could get financing for a tax sale property (although in hindsight I really don't think the banker knew what I was talking about and only said "yes" to me in attempt to keep me as a client).

I ended up winning a tax sale for $227,000 and had posted $46,000 as my 20% deposit (which was money I didn't really have as the funds came from an unsecured line of credit with the same major, blue and gold bank). When I notified my banker that I had won the sale, the bank started to stall over the next 12 days. In the final 48 hours that I had to pay for the property in full, or risk losing my $46,000 deposit, my friendly banker said that the bank would need more time to offer financing. I begged the bank to reconsider and stated that if I didn't pay in 48 hours I would loose my $46,000 deposit. Then, with only 24 hours to pay for my new rundown tax sale home, I maxed out three credit cards with cash advances,  begged three family members for a short term loan and offered my kidneys, liver, blood and first born as collateral, and managed to pay the purchase price with only an hour to spare.

It then took another 35 days to obtain title from the city's solicitor, meanwhile I was paying 20% interest on my credit cards and insuring a property I did not yet own (which was also difficult and expensive to do).

When I finally got title, I went to another bank (a much more understanding red and gold bank that has never stood me up like the other blue and gold bank) that was able to offer me a secured line of credit against my newly purchased tax sale property. Since it was a tax sale property that had been spray painted, had the windows smashed in and had no running water, gas or electrical, I got the new bank to only offer me a line of credit based on the postal code rather than an actual inspection of the home as a home inspection would raise more red flags.

With the second bank's secured line of credit on my new tax sale property, I was able to pay off my family members and credit cards. Once that was done, I still needed other unsecured lines of credit to the tune of $90,000 to renovate the home to get it ready for resale.

At the end of the day it was an excellent, although for a brief couple of days a terrifying, experience.

Will I do tax sales again? Absolutely.

Is there a big risk that you'll loose money? Absolutely.

Is there a possibility to do well and turn a profit? Yes, but with proper due diligence and with either cash or access to funds.

As Frank or Dave mentioned, which is so, so true .... You've got to pay to play this game and you cannot rely on others money.

Unless you have other assets, such as an existing home, that you have sufficient equity in to obtain a secured line of credit to pay for a tax sale property, you will need cash!

Best of luck and thank you to all for your continued helpful posts.



Title: Re: New kid on the block looking for some help and advice!
Post by: Frank on June 11, 2014, 05:44:01 AM
And the light finally comes on.  

Dave, you can now advance to the next level in my math course....this one involves learning how to balance your bank account....no don't rrrun to get the bathroom scales out lad, it's no that kind of balancing routine (note the scottish inflection).

For starters you have to withdraw sufficient funds to purchase a medium coffee, cream only, for your instructor.  You may have to blow the moths from your wallet in order to find your debit card (I know a little of those scottish ancestors of yours, and yes they can squeeze a penny from a rock, and never let it go).

Let me know how the next part works out for you...just sign up on line for the course and we are to the races.  8)

http://www.youtube.com/watch?v=bTXiLZaDu-E


Title: Re: New kid on the block looking for some help and advice!🐊
Post by: g2020 on June 11, 2014, 09:50:48 AM
Quote
For a coffee or beer what opportunity did I miss.
My guess, is you are referring to his upper New York State franchise offerings. Beer, or no beer? Now back to tax sales - the tax sale yesterday had a government interest of $200,000 in favour of the Business Development Bank of Canada. This would normally make it not worth bidding. However, farther on down the parcel register were two "transfer of charge" entries where the government interest was transferred to Sorgen Holdings Inc. and then subsequent to the certificate being registered for the tax sale, the interest gets flipped to Anna Sordi. If the Business Development Bank of Canada guaranteed the mortgage that they assigned, is there still a government interest clouding the title? That is the type of risk we face. Obviously no one, me included, had the guts, or financial wherewithal to stand up to the plate. This 8 acre waterfront assessed at nearly 300K went down in tax sale history without a single tender according to the results published on the OTS web site this morning. Tax sales are for gamblers and mid night ramblers - not for risk adverse paupers. Sorry if I offended anybody but that is the way this old fart sees it. 🐊


Title: Re: New kid on the block looking for some help and advice!
Post by: nomzero on June 13, 2014, 12:42:59 PM
Thank you all for your words of wisdom, support and laughter.

No longer a 'wanna be' investor. Just won our first bid and we're in the game.  :D

Hoping for continued support and insight from all of you along the way. It's exciting and scary to be here but more exciting than scary! Thankfully.
Esp. knowing that we have such great minds to learn from along the way.

Just have a quick question about access to the property. This one is 'most' likely and looks vacant. According to the city officials we could just go ahead and get the locks changed. Has anyone here had any experience with this kind of a situation? Any information would be helpful and appreciated.

Over and out for now as need to get a lot done and time to catch up on some much needed rest and down time from all the excitement that has been building up!

Have a good weekend y'all.



Title: Re: New kid on the block looking for some help and advice!
Post by: pjdd on June 13, 2014, 09:37:32 PM
Congratulations' now the real fun begins... (kind of) as for your question about access to  the property all Municipality's clearly states "The municipality has no obligations to provide vacant possession to the successful purchaser"  I have never heard of a official simply say " go ahead and get the locks changed" this does not sound right..... I do hope for your sake the property is vacant otherwise you could be opening a HUGE can of worms. As stated  earlier you have to do your own due diligence right from the get go.....GOOD LUCK


Title: Re: New kid on the block looking for some help and advice!
Post by: nomzero on June 13, 2014, 10:27:38 PM
Thank you pjdd.

The city officials were fairly certain the property is vacant too!

What sources would you suggest for more information apart from the Sherrif's department?



Title: Re: New kid on the block looking for some help and advice!🐊
Post by: g2020 on June 14, 2014, 09:26:32 AM
Please wait until you get your deed. Hydro is always my first choice - they can usually tell you if there is currently consumption, and if indeed the hydro is still connected. You will need to talk with hydro staff to get the billing into your name anyway, so they are likely to be very helpful. The previous owner's arrears are not your responsibility! Once you have your deed it is a good idea to meet the neighbours and gather as much information as possible - I once bought a Kingston house owned by the top dog in Satin's Choice. The Sheriff will only act to enforce a court order, once you have gone through the long and expensive procedure to get one. If it was the North Dumfries house that sold on the same day that you mentioned then you may want to discuss the issue of the furnishings such as the dining room suite, and the correct procedure to protect yourself.🐊


Title: Re: New kid on the block looking for some help and advice!
Post by: Dave2 on June 14, 2014, 09:41:24 AM
Quote
For a coffee or beer what opportunity did I miss.
My guess, is you are referring to his upper New York State franchise offerings. Beer, or no beer?  

Tax sales are for gamblers and mid night ramblers - not for risk adverse paupers. Sorry if I offended anybody but that is the way this old fart sees it.  

You are not the only old fart around here.  It was back in the dawn of time and in case anyone does not recognize it we are talking Timmies.  

I guess I fall into the "wusses" category of this esteemed group.  So be it.  But as you yourself said there can be real risk here
and I am the first to admit I will play the game in my own way.    

On the issue of buying an occupied property simply put your  alternatives are to evict but do it fast or to become a landlord.  

ON the latter you might spend an afternoon reading this forum to see what you are getting into.  


http://www.ontariolandlords.org/forum/index.php?sid=a3ca96a34822c26cfcc0cbf0f1a95e1d


Anything else gets into a case where the devil is in the details and that is a situation for Private messages


Title: Re: New kid on the block looking for some help and advice!🐊
Post by: nomzero on June 14, 2014, 10:10:56 AM
Please wait until you get your deed. Hydro is always my first choice - they can usually tell you if there is currently consumption, and if indeed the hydro is still connected. You will need to talk with hydro staff to get the billing into your name anyway, so they are likely to be very helpful. The previous owner's arrears are not your responsibility! Once you have your deed it is a good idea to meet the neighbours and gather as much information as possible - I once bought a Kingston house owned by the top dog in Satin's Choice. The Sheriff will only act to enforce a court order, once you have gone through the long and expensive procedure to get one. If it was the North Dumfries house that sold on the same day that you mentioned then you may want to discuss the issue of the furnishings such as the dining room suite, and the correct procedure to protect yourself.🐊

Thank you g2020. About talking to Hydro. Appreciate the heads up on that.

If there are furnishings/belongings inside the house but it has not been lived in for a while how would that be dealt with? Who has the right's there in your experience?

The previous owner/occupant(tenant etc.) or the current owner?

Not looking for legal advice just the experiences you might have had or heard of.  Anything is helpful.

Again, thank you for the continued support.


Title: Re: New kid on the block looking for some help and advice!🐝
Post by: g2020 on June 15, 2014, 11:42:01 AM
With respect to contents there is a specific procedure to follow that involves posting an advertisement in a local newspaper and then waiting a short period of time. There was a posting a while back by a brilliant poster who went by the handle of PFM1011 and perhaps Rob or NetPred can dredge it up for you. I have only had one situation where it paid to hire an auctioneer and in that case the profit on the contents was about as much as the profit on the house. Sometimes I have been able to get a bill of sale from one owner. Cottages will usually also have boats,furnishings, and appliances which I would always sell with the cottage. In this instance if you are an HST registrant, the cottage itself is exempt, but you charge and remit on the boats and contents and total them separately on the value of consideration form. Even vacant lots can house cars or mobile homes, which become yours only if you follow the proper procedure, and are not covered by the tax deed. These days the profit on tax sales is so thin that you almost need to get the occasional windfall profit from the contents to make it worthwhile, and fun.🐊