You must be logged in to reply to this topic.
-
I wanted to get some honest feedback from my friends here at CFD.
I found a house free and clear and after talking to neighbors, they told me the owners (an elderly couple) have passed away and they had no children or heirs. The county/public administrator went in and tried to liquidate all their assets. They also tried to sell the house. The house never sold and now the taxes are delinquent 5 years. It’s going up for a tax deed sale on March 2nd. So here’s what I’m wrestling against… The house has major fire damage from some kids messing around and it is now boarded up.
The county taxes due in order to stop it from going to bidding wars is $3100.
It’s a 2 bedroom, 1 bath 980 sqft on a 6k sqft lot. ARV if it were fixed and livable is 53K. It needs a full rehab. So I ask…since the house is free and clear, no one to interfere, should I pay the $3100 in taxes and continue to pay the taxes for the next 4 years which is about $400 a year? I can then retrieve the title via a quiet title suit which will cost me $1500. So here are the facts..*free and clear, no interference
*needs a full rehab due to fire damage
*I can get title via Adverse Possession
*current worth (ARV) 53K
*it will cost me $3100 plus $400 each year(4 years) plus the full rehab
*can rent for $600-750Should I??
Two questions:
1. What is a good estimate of the full rehab cost?
2. Is this in a state where the adverse possession law requires that you actively occupy the property during all those years before taking title? If so, that alone could be a deal killer unless you’re prepared to move, and move in.
If it’s a #2 type state, you might have troubles meeting the adverse possession requirements. I’d want to read that part of the state law in great detail. Would you still meet those requirements by leasing out the property that you don’t own in the meantime? (I have my doubts, but don’t have the facts.)
Even if you could meet the adverse possession requirements and could lease out the property in the meantime, it could be several years before you could get clear title, sell the deal and cash out. Given the time required, how does that compare in ROI to other opportunities for your efforts, risks taken, and cash? Is this really low hanging fruit, or just the only one on the tree at the moment (a “beware” possibility)?
3. I’d want to talk with an attorney in that state who is very familiar with local adverse possession cases and case law, and run such plans by him/her. There may be hidden gotchas in that history you’d really need to know about.
Dlgraber, thanks for the response.
I’ve dealt with adverse possession and learned my lesson on the first one I tried about a year and a half ago. My first AP deal went south because I moved too fast not knowing the county was acting as estate adminstrator for the decedent. During that time I did lots of research and almost memorized California code of civil procedures 321-326 and civil code 1007. Those code sections essentially required that a party must occupy the real property hostilely, openly, exclusively, and continuously for a period of five years and pay the property taxes on the land. Occupy does not mean I need to live there but I should put up a fence, cut the grass, trim trees and just act as if the property is mine even fix it up and rent it out.
The rehab is tremendous. 980 sqft… about 20-25 items that need repairing… I would guess 30-35k for the rehab on the small house.
It has major fire damage. Not only that but I may be moving to Panama soon. I was thinking of having someone take care of it for me while I pay the taxes. Not sure, I really don;t want to do the AP deal but I also don’t want to miss a great opportunity if it is one. Any ideas on how I can cash out and sell this to a rehabber?Re: cashing out and selling to a rehabber,
Well, here’s some goofy thinking. Sorta like options (and a few other such rights) that are assignable, is there a way to treat adverse possession “rights” in a similar fashion? And if so, could you somehow sell your adverse possession position to a rehabber? It’s not like there’s a title to go with that position.
Not knowing a thing about California law on adverse possession, is there anything that could get in the way of proposing to some adventurous rehabber that if he’d like to play the adverse possession game – and build up some great property value doing the rehab, for a little cash you’d be willing to step aside quietly so he could step in and play the game you were planning on. If that could be made to work, that would free you up to move out of country without worrying about funding a rehab and finding some Tilney-capable middle-man to manage the property while you’re running nature tours in Panama.
Is it possible the deal could be that simple? Or is it that in California nothing is simple anymore?
.
LOL…I really don’t want to do the AP deal but it’s a great opportunity for someone. So I posted an add on CL…
“2bd 1 bth house, 980 sqft, on large 6k lot can rent for $700, need tons of work ,fire damage asking 2k for rights to take property after paying all taxes taxes and occuping for next 4 years”
I got three phone calls and I’m meeting with one guy later today. I’m basically getting a finders fee and explaining the full process to the rehabber for 2K.
For sure we’ll need to sign an agreement as well.Dee
I LOVE YOUR AD!!!
Arcinio
You need to think about the fact that you probably won’t be living in the USA more than a year. Instead of working on cash flow properties, it might be better to just focus on cash cash cash. Then you’ll have a cushion when you get the Panama and money to start acquiring cash flow properties here.
Your short term goals need to take in to consideration your long term plans.
Jackie, you’re right. That’s the same conversation I had with my wife. Thus I don’t think it’s in my best interest creating notes, doing master leases, or finding rentals for long term cash flow. My main focus will most likely stay in the area of HBS, Options and quick flips for cash. I’m excited to learn about the deals in Panama.
Dlgraber,
I plan to use your add (if you don’t mind) So far one guy is highly interested in taking the property via AP. We mutally decided that he needed to speak to a RE attorney, and read up on CA. AP before he dives in and pays me 2k. I need to return three other phone calls of people interested. I’ll keep you posted.per panamapreacher:
“Dlgraber,
I plan to use your ad (if you don’t mind)…”Isn’t it fascinating how we learn most effectively from our blunders. See, if I’d been crafty enough to have trademarked that phrase “Don’t Occupy Wall Street, Occupy THIS HOUSE”, I could have been positioned to oppress and extort real estate advertisers from now on — instead of turning the phrase “loose in the wild.” Silly me.
Seriously, have at it, and let us all know how the process works for you. Go get ’em!
You must be logged in to reply to this topic.
