By Marcus Tuttle,
CashFlowDepot.com Member
New Orleans
My standard practice is to drive around areas where I believe there is opportunity to achieve some equity (areas that are on the upswing mainly). I take pictures with an iphone app called GPSkit. This app records your gps position and allows you to record photographs along your path (I think it costs $10). After I get back home I am able to email myself the file that I create and open the .kmz file with Google Earth. I then match my photos with my assessor’s website map and determine the address and whether or not they owe back taxes.
While processing these records I found a large multi 3 unit building in a great area that needs repair (the other houses on this block are in great condition). It had 2 large tax liens and a note on the assessor’s website that stated that ” BOTH OWNERS DEAD PER ATTNY” (I just copied and pasted that from the assessor’s site as it hasn’t been updated yet). Anyway – I see that people are living there and after trying to search for a descendant with Merlin Data, I went and knocked on the door. The guy answered the door and I asked if he was the owner. “Yes” he said. I asked him if he knew that he was about to lose his house to a tax sale. He said that they weren’t even receiving a bill. I think that he knew he owed taxes and just didn’t want to deal with it. I just gave him my card and left it at that.
I followed up with him about a week later and he invited me to meet with him a local bar as he is some kind of music producer and he was there watching one of his singers. We met and talked about what they wanted to do with the property and they said they were unsure. I had went to the assessor’s office and found out that if they let the tax liens go unpaid that they would lose the right to simply pay the assessor, and if they didn’t pay by January 20, 2013 they would start incurring legal problems. At this point I am starting to think that these folks are going to go down with the ship. I have seen this happen more than a few times. Before I leave, they tell me that they are going to pray about it and that they will keep me posted. I think that I am toast at this point.
4 or 5 weeks go by, then one day I get a call and it’s them. They want to meet (although I’m not exactly sure why at this point). We meet a coffee shop and they are still hemming and hawing about what to do. This is where some of Jack’s training comes into play. I just take out my checkbook and ask them what number they want me to write on the check. Visibly shocked they ask me what I would pay. I said that I needed to be between $250 and $300 depending on the condition (I hadn’t seen the inside yet). I asked again what to make the check for. They said $278k (the house is probably worth $380k as it sits). I then scratch out a purchase agreement on A SINGLE SHEET OF NOTEBOOK PAPER (like I have heard Jack say a hundred times) , we all sign and afterward I run to my title company to get the succession for his grandparents and mother started (inherited property)
A few days later, I decide to work on them a little more (like I think Jack would do) and get some owner financing. I ask them to let me buy them a house and then let me pay them out at say $1000 per month until I pay them off. They say OK and they tell me that they just happen to have found a little VA repo about 50 miles from New Orleans. We go and write a contract on that one and get it accepted.
The numbers go like this, $278k purchase price – I pay $115k for the back taxes, succession fees, and the new house so they finance $163k for me $1000 per month until I pay them off (I didn’t say anything about interest!)
I let that agreement go for a couple of more days and then I decided to work on them some more. I told them that I am using a line of credit for the purchase of their house and that I will need to put a permanent financing product on the house later in order to pay off the credit line so I got them to agree to subordinate their financing to a first lien up to $250k. I was proud of myself on this concession.
So that’s the deal. Maybe some of the things that I did in this deal may inspire someone out there on CashFlowDepot.com. I know that listening to Jack’s lessons at CashFlowDepot.com helped me.
Best Regards,
Marcus Tuttle
