Trustee sale interview part 2

Todd: Hello welcome to Todd Miller TV. I’m here again with Rich Wise’s part two of the video series about the Trustee Sale here in Las Vegas. rich, there’s a lot of people out there, they kinda get it, they know that they could out there with some money and buy a property, fix it up an then re-sell it and make money. And obviously you’ve done like Six hundred at least in the last Three years. So you’re probably aware of some common mistakes that people make. So what are the things those guys out there should like watch out for?
Rich: The first thing that you’ve got to watch out for is the Title work. Make sure that you’re running proper titles, that you’re not buying a second mortgage, you don’t have exorbitant HOA fees or back taxes, delinquent taxes that are owed on the property, a Lis Pendens could be filed on the property, mechanics liens; this are the short falls that people run in to. They come down to the auction, they think that they could a Hundred Thousand dollar house for Seventy Thousand dollars, and they don’t do their homework. Some of the other pitfalls are: you didn’t actually look at the house, you don’t know if the roof is okay, you don’t know if the plumbing works, you don’t know if the AC works, and when you do actually walk into those homes, and it’s time for you to paint and clean it up, and put some new carpet, long behold the Air Conditioner is not there. Long behold the roof isn’t there. So there’s a lot of homework that you need to do before you buy that home.
Todd: So, if somebody tells you “I want a net Twenty Thousand dollars on the sale of a home that’s like in the low hundreds”. Do you then look like before you bid? Does that affect how much your willing to bid ’cause you know there’s some HOA Liens, and some Title or some other fees that might be involved like past due HOA or Liens or things like that?
Rich: Absolutely! Let’s say that I value a house at about a Hundred and Fifty Thousand dollars, I’m gonna take a look what the HOA Liens are, delinquent taxes, any assessments on that house, and I’m going to total up that number and for argument’s sake, let’s say it’s Ten Thousand dollars; So a house that I could sell for a Hundred and Fifty Thousand is now worth a Hundred and Forty Thousand dollars to me. Then form there, we need to back out whatever the rehab costs. The average Rehab costs these days is around Five Thousand dollars per house, plus or minus. So you need to back out the Five Thousand. So now the house is worth One-Thirty-five. From there, you need to back out Realtor fees, acquisition cost, selling cost, Escrow fees, all of those things; you need to take those into consideration and back it out from the dollar that you’re willing to/that you think you’re gonna get form that house. And then you need to back out your profit; and once you do the math, you’re gonna get a starting point. A maximum bid as I like to call it for that home.
Todd: Have you ever just seen somebody down there to Trustee Sale bidding and get a property and you sort of scratched your head in the end and thinking why did they bid so much for that property?
Rich: Every Single Day! It’s amazing! But the other thing is, you never know why that person is buying it. Was it his home to begin with? was he buying it for a Rental property? And if it is a rental property, you can always pay a few dollars more for it because you don’t have to justify the selling of it and the commissions to sell it. You’re gonna rent it, have tenant, it will be an income property so, it does affect why other people buy it. But when that house is worth a Hundred and Fifty thousand dollars and they paid One-forty for it, I scratch my head.
Todd: Okay! One last question: You’ve done about Six hundred of these over the last three years, how many of these have you either broke in money or not broken even or not made money out of six hundred?
Rich: We have lost money twice, and we broke even about three or four times.
Todd: So basically your percent rate of like making money is about Ninety-nine percent or extremely higher number.
Rich: It’s about right, yeah!
Todd Okay! Very Good. Well thanks very much! It really informative. That is the conclusion of part two of this. We’re gonna do/go to part three which you might wanna stay tuned for. Thanks for tuning in.