This Issue: How to Let the Government Make You Rich

Government Agencies Are Busy Creating Real Estate Investing Opportunities in Virtually Every American Community

Some real estate investors complain about the government. That's easy to understand. None of us like code enforcement, property taxes, building codes, etc. But the fact is, you should love the government, because it's hard at work creating hundreds of thousands of good deals for you.

Many government agencies acquire properties well below market value and then turn around and sell them to the public. These government-owned properties are not hard to buy. After all, government agencies encourage people (homeowners AND investors) to buy property in communities all over the country. Why? Because it is to the government's advantage to provide safe, well-maintained, affordable housing to its citizens.

Here are several examples of how government agencies acquire properties for pennies on the dollar, and how you can find them:

1. Property Tax Defaults
   
   Properties are sometimes seized by county governments due to an owner's failure to pay local property taxes. Check with any county tax assessor's office about their tax sales.



2. Bank Failures
   
   The Federal Deposit Insurance Corporation (FDIC) comes into possession of homes and businesses whenever a bank fails and has repossessed assets in its possession. Once they become the property of the FDIC, they are sold at very low prices in order to liquidate them quickly.
   To bid, call your local FDIC office or call the FDIC at 877-275-3342. You can also go online at www.fdic.gov, click on Asset Sales, then Real Estate Sales, then FDIC Real Estate for Sale where there is a form you can fill out to get a list of properties specific to your area and needs. After identifying properties in which you are interested, each includes a contact name/number to get further information about that property and/or make your bid.



3. Probates
   
   The government sometimes acquires property upon the owner's death after the taxes and other liens have failed to be paid by any beneficiaries. Probate of the estate is frozen until taxes/liens have been paid. In many cases, the heirs prefer to sell the property rather than pay what is owned and go through a lengthy probate procedure to divide the property.



4. Foreclosures
   
   The Department of Housing and Urban Development (HUD)
   HUD obtains foreclosed properties when the mortgage was insured by the FHA (a division of HUD) and sells them to the public, non-profits, and governmental agencies--usually at discounted prices. HUD properties include all types of single family dwellings (1-4 units) and multi-family dwellings (5 or more units). For further information, call the FHA at 800-225-5342. To locate HUD properties for sale you can find lists in daily newspapers and online at www.hud.gov/homes.
   
   To submit a bid, you must use a licensed real estate broker. HUD uses a competitive budding process on-line at the above-listed site and the bid giving the highest acceptable net return is chosen.
   
   Veterans Administration (VA)
   Properties are acquired by the VA when veterans default on their mortgage payments (if it was a VA loan). VA properties are sold through an agent of the VA, Ocwen Federal Bank (www.ocwen.com). These are available for sale to the general public, but not to veterans.
   
   Bids must be made through a licensed real estate broker who is registered to sell VA properties. The VA may pay some closing costs.
   
   United States Department of Agriculture (USDA) The USDA, through their Rural Housing Service (RHS), sells foreclosure properties such as:
   • Single and multi-family rural housing
   • Farm/ranch properties
   
   
   The properties are offered either directly by the RHS or by a broker. For further information about the purchasing process and to obtain lists of their foreclosure properties, you may call the USDA Rural Development Office at 202-690-1533 or check out their website at www.rurdev.usda.gov.



5. Seizures of Criminal Assets
   
   U.S. Marshall's Service (USMS) Asset Forfeiture Program
   The USMS offers properties for sale to the public that have been seized by federal law enforcement agencies. They include residential and commercial real estate, raw land, and even personal property (boats, cars, etc.).
   
   To obtain their current National Sellers List--which lists contract service providers and federal agencies authorized to sell these forfeited properties--go online to www.usmarshals.gov or call 888-878-3256.
   
   Some of their seized properties are listed with Fidelity National Asset Management Solutions (FNAMS). Fidelity is a full service national asset management firm (a real estate broker). These properties can be found at www.fnams.com.
   
   U.S. Department of the Treasury
   Real estate seized through U.S. Treasury criminal investigations--including homes, condos, and commercial buildings--becomes property of the U.S. Treasury. Most properties are liquidated through cash sales by voice auctions at the actual property's location. For information, call the Department of the Treasury at 202-622-2000. For other important information, go to www.treas.gov/auctions/treasury/rp.

One thing to remember is that most government-owned properties are sold in “as-is” condition. Although rehab work is often needed, the low price--and the big potential for profit when you sell--will usually offset repair costs. We recommend that you inspect any properties for sale--especially those being auctioned. If repairs are needed, you can fix up the property and then either sell it at a profit or rent it out to receive a nice monthly cash flow. (For tips on rehabbing property, review Issue #124.)

Any way you slice it, there are lots of exciting ways that the government creates real estate deals. There are even more exciting ways that the government acquires and then liquidates those properties. So the next time you are tempted to complain about the government, just remember what a great help they can be when it comes to creating and finding great deals for you!

Searching Public Records and Attending Court Cases Can Yield Great Leads for You

As a real estate investor, your county courthouse is a veritable gold mine of information. First of all, there are many types of courts that help create motivated sellers (even when they didn't think they were motivated). Let's take a look at six of those.

1. Codes Court
   Go to your local housing administration office to find out scheduled dates for codes court--where landlords and investors go to defend their interests. The codes court enforces the codes and can issue fines. They can even condemn homes and have them bulldozed.
   
   The docket for the day is usually posted outside the courthouse, and the proceedings are all public record. Motivated sellers come to these courtrooms. Chances are you'll find a good deal.


2. Eviction Court
   In every major city, evictions take place at least a few days a week. Who shows up there? Tenants, attorneys, landlords, and managers. Owners who have a conflict on their hands and go to court to resolve it can also be in the market to sell for a good price.
   
   Know that when you go to eviction court, you may find some great deals, and you'll also find better entertainment than any TV sitcom. If you'd rather avoid the drama, simply get the names, addresses, and phone numbers of people on the docket. Send them a letter that asks, "Do you have any properties you'd like to sell?" Then follow up.


3. Probate Court
   You can look in the public records, where deceased persons' assets are listed. We talked at length about probate property in Issue #122. Contact the attorneys and the families and say, "Would you like to unload these properties quickly? I can help you out."


4. Divorce Court
   Because divorce records are public, you can actually look up case files and see what a couple owns. Many may have a home they must sell, and they're often willing to take a discount just to settle their assets and get out of the marriage quickly. Get to know some divorce attorneys, keep in touch with them, and show up at divorce court. You might find some good deals there.


5. Tax Sales
   If people don't pay their property taxes, the government taxing entity will demand payment and can force a tax foreclosure. You can buy the property at a tax sale or, in certain states, you can buy a tax lien certificate for the amount of the back taxes. By purchasing a certificate, you will receive a specified amount of interest on your money. (Some tax lien certificates pay anywhere from 10 to 30 percent interest!)


6. Environmental Court
   People who leave too much junk on their properties end up in this court. And don't we all have too much junk? Just don't keep it in your yard, because this court fines people for not removing trash and not cleaning up the debris in their yards. These homeowners are often ticked off about being harassed by the local government, and would like to leave their properties.

Owners of properties that end up in these courts can be highly motivated to sell. Go meet them (and their attorneys), get their names, and contact them afterward. They could turn into good deals.

Searching Public Records

When you visit your county courthouse, you shouldn't just check out the previously-mentioned courts. You should also use the opportunity to search public records. Concentrate on four departments--the recorder's office, the county tax collector's office, the clerk of the court, and the real estate assessor's office. Depending on the county, you can now find many of these departments online.

1. The recorder's office can give you the names of the past and present owners, how much was paid each time the property was sold, and the financial aspects of each transaction. It will also have information regarding any liens or judgments against the properties.


2. The county collector's office usually handles tax liens against properties with unpaid taxes.


3. The clerk of the court's office can furnish information on any mortgage foreclosure, including remaining balance, the original balance, the lender and the lender's attorney, plus the name and address of the defaulting parties.


4. The assessor's office has the most complete information on properties. It can give you the assessed value of a property, the square footage, any improvements, and the lot size. It can even give you the name of the person paying the taxes, which is usually the owner, and much, much more.

Visit your county courthouse today and take advantage of the goldmine of opportunities you find there. By searching public records and attending court cases, you will find more potential deals than you'll know what to do with.