New kid on the block looking for some help and advice!

[PG]

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.

[Frank]

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.  

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

[g2020]

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. 🐊

[nomzero]

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.  

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.

[pjdd]

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

[nomzero]

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?

[g2020]

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.🐊

[Dave2]

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

[nomzero]

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.

[g2020]

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.🐊