Episode 245
http://www.WeCloseNotes.com

Scott: We have our special guest from our WCN family, the man, the myth, the legend, our very own Greg Arcizo. How are you doing?

Greg: Good.

Scott: Before I bring Greg on and talk, Greg’s been handling this from when you started in the office for the most part, right Greg?

Greg: It’s one of my first tasks.

Scott: Greg, you’ve been with me for almost over a year and a half now?

Greg: Almost two years.

Scott: Obviously, everybody knows that they talk with us about due diligence and we’re always double checking property values, property taxes, and property title. Those are always the big three things. Two out of the three year you check on the frontend, the title, you pull on the backend. When we get a tape in and I throw the tape to you and you’re checking taxes, what’s a big red flag that you do when you’re checking taxes on note deals?

Greg: We’re trying to see if a tax sale took place in between the person that’s trying to sell it to us and us.

Scott: What’s the big red flag that throws it off right off the bat? If we’ve got a spreadsheet in with the borrowers’ names, what do you see when there’s something different?

Greg: If there’s a company name versus the borrower’s name on there. It should be deeded to the borrower, and if it’s deeded to an LLC or an Inc. Company, then probably a tax sale happened in between or even somebody else’s name.

Scott: That’s what Greg does. That’s one of the things that Greg is good at doing. He’s much better just checking taxes, we all know this. What I’m getting at is that one of the things that we often have done, and I’m guilty of this in the past too, is if we’re doing a search and we see the name change and we see that a sale took place, I go it went to a tax sale. That often nullifies the whole deal. If you take it one step further, you will often find money sitting out there ready to be claimed. Without giving away anything, you’ve filed how many claims for us over just the last couple of months?

Greg: Five probably.

Scott: Why don’t we rattle off the amount of the tax overages that you’ve claimed for us?

Greg: We just got one for $35,000. I might be going for $75,000. That’s probably going to take about three months to finish up but it’s in the works. I think we’ve had another $30,000 or $31,000 and I think a $20,000 check and one for $8,000. It ranges $8,000 to $75,000. That’s what we’ve got so far.

Scott: Most of these are on crappy assets. Greg has not seen some of these like the one that we just got in with on an asset that was maybe worth $30,000. It had a huge HOA lien on it that didn’t get wiped out. Let’s talk about what happens that lead to overages, you don’t know about this. This is what happens a lot of time. I know what the property’s worth because I’ve seen the property. Let’s just talk about the one we just saw here. It’s a condo. It needed work. It had been gutted. Zillow gave it a value of around $75,000, $80,000. It needed about a good $30,000 in repairs because of a new sheet rock, new plumbing, new wiring. I had seen it. We foreclosed on the deal. It was part of a pool of assets we bought. I’ve made our money back on the other assets. This is just a crappy condo in a rougher area of Orlando.

I know the taxes are coming up and I’m like, ”It doesn’t make any sense for me to drop $15,000 in back taxes on a single and come out, I’m really not going to make anything.”We kept an eye on it and lo and behold, we start getting phone calls. I get a phone call, “There’s a tax over,” and that’s what you have to realize. There are companies out there that all they do is they watch for tax foreclosures to see if there’s a tax overages. Now, what happens with tax overages? Let’s say three years of back taxes, and what usually happens is once a property has three delinquent years of back taxes, it’ll go for a tax sale. In some states they do a tax certificate for each year’s taxes are sold off for an interest rate. In fact tax certificate investors buy those up to get a flat return investment, and after three years they can then force it to go on a tax foreclosure.