The $100 County Auction - Part 1 of Several

So, here we are July of 2016 and Real Estate, at least in Florida, is back to being a hot market again.  Everybody wants in and you can tell by the Real Estate 'Auction' sites such as Auction.com and Hubzu.com.  These sites use to simply work with the banks and 'Auction' off their REO inventory, but now everywhere you go you see these $100 minimum bid auctions being advertised on these sites and others like Zillow, Trulia, and Realtor.com


Hey, I want a $100 property, how do I get into this advertised action?

• The foreclosure and REO industry is a large complicated one with many ways to benefit and many ways to get burned.  I won't go into all of the in and outs of the industry and how to benefit, but I would like to touch on these $100 auctions.
• County Auctions are where the foreclosure auction of a property actually takes place.  Yes, every single county in every single state holds these auctions on a daily basis.  Each county has their own set of rules on what days and times they auction properties as well as whether they hold their auctions online or in person.  Which ever county you would like to participate in will have those rules setup usually on their Clerk of the Courts website.

So, what are the steps that I need to go through to be able to bid?

• If the county you want to participate in holds their auctions online then you will need to create an account with that county prior to being able to bid at Auction.
• Once your account is created you will need to fill it with funds, the percentages vary, but lets say that your county needs a 5% deposit of the bid price.  So what that means is that you have to place 5% of your possible maximum bid for any property into this account, otherwise they won't let you bid.
• You have decided you want to only bid on properties that are $50,000 or less.  You will need to add $2500 to your account.
• If the county you would like to bid in has in person auctions, best to come with a pocket (or briefcase) full of cash, it'll be due at close of auction.

Ok, I am all set up, on to my first auction.

• In the online auctions there are two ways that bidding can occur, you can set a maximum bid and let the software up your bid as you are outbid or you can watch the auction in real time and bid manually.
• So, you have done your research and you have found the house that you would like to bid on.... wait, did you get a title report before the auction?  Oops, more info on that in a later post.
• There are 30 houses being auctioned today, your property is #17.  So you wait, and you wait, and property #11 two people are manually bidding against each other and waiting till the last second to put in their bids so this property that should take around 5 minutes is taking 20 minutes.  What these two don't realize is that you can't sniper bid on these county auctions, it resets the clock.  So you watch them for another 5 minutes and somebody finally concedes.
• Ok, here we are at Property #17.  There are to many scenarios to talk through so we will go through a few assuming you are bidding manually.
1. Your dream property says that the plaintiff has a maximum bid set of $75,000 and the property is valued at $100,000 with a final judgement of $75,000.  Oops, guess you should have looked at that prior to spending all that time and effort, you can only bid up to $50,000 with your deposit.
2. Your dream property says that the plaintiff has a max bid set of $35,000, is valued at $60,000, and has a final judgement of $36,000.  Great you can get in on the action.  Bidding starts and it pops to $55,000.  Shucks, guess you will have to try again.
3. Your dream property doesn't have a plaintiff max bid, is valued at $60,000, and has a final judgement of $45,000.  Great you can get in on the action.  Bidding starts and it pops to $45,100.  OK, the plaintiff (most times the bank) can no longer bid, why not you ask, well that will be another post.  The clock is ticking and you put in a bid of $45,800.  the bid price goes to $45,500.  The clock ticks.  The bid price goes to $45,900 all of a sudden, someone outbid you.  You put in another bid of $48,000 and the bid price pops to $47,500, you are now winning.  The clock ticks, its almost yours, nope the bid price goes to $48,100, you have been outbid by someone that thinks they can snipe bid you, the clock starts over.  This goes on for several minutes until the other person takes you over your $50,000 bid cap.
4. Same scenario as #3, but this time you win the auction at $47,500.  Congratulations, but you aren't done yet.

I won - now what?

• You won your auction at $47,500.  Most of the time the auction will send you an email directly after the auction that you have won with a request for the total that you owe (not just the $47,500) but also fees.
• If you have $48,000 in your auction account you simply log in and pay it.  If you only have $2,500 in your auction account, its time to get moving.  You now have to go to your bank, get the additional funds so that you can take it down to the county courthouse, deposit those funds, then come back to computer, log in and pay the amounts online.  In  a lot of counties you only have until the end of the day (4 pm) to pay the funds.  If you don't then you get banned and the property gets re-auctioned.
• Now you wait 10 days for the deed and proof of purchase.  That is if you didn't just buy a subordinate lien.

I Lost - now what?

• So you have lost your auction.  Unless you want to outbid everyone and money is no object get used to it.  There are a lot of competitors in these auctions, including the banks, and a lot of money that gets used.  Do your research, stick to your maximums, and you will get there eventually.

Future Posts

• Doing your Research
• Rules for the plaintiff
• Getting Inside
• Securing your vacant winnings
• Oops, yours came with Tenants
• WOW, not what I expected to see.
• Possible Problems with your win
• Who are all of these people in the defendants list
• Right of Redemption - Owner and IRS
• Title Reports
• Did I just win a subordinate lien? HOAs and Equity Loans
• Property Taxes

If you have a specific topic you would like to see covered or have additional questions on these subjects, please feel free to contact me at justin@kajukaproperties.com or visit us at Kajukaproperties.com

7 Deadly Sins of Landlording

I came across this PDF article created by allpropertymanagment.com

Its a good article to read whether you are currently land lording or considering it in the future.

7 Rental Properties Sins

Taking/Giving Cash for Rent

In this day and age it surprises me that there are people out there that are paying their rent with cash or wiring money.  There are several issues with this from a renter and owner point of view.

As a renter, if you plan on handing someone cash for your first month's rent and deposit, make sure you get a receipt, have a lease, and are handing it to a reputable Property Management company.  I have heard numerous stories where a tenant sees a house, hands some 'guy' cash as a deposit (upwards of $1500), then they leave thinking that they have secured the house.  Just so happens that this 'guy' doesn't own the house and isn't contracted by the owner to rent it.  How did he get in, who knows... maybe he is maintenance and knows the lock box code.  Maybe he broke in the back window before you showed up to view the house.  Either way, even if this 'guy' gives you a receipt you probably aren't going to be able to track him down.

And then there is the infamous craigslist owners that really don't own anything but hijack rentals and advertise them at extremely low prices.  When a prospective renter calls them, they tell you to drive by (because they are not in town to show it) look in the windows and if you like it wire them a specific amount of money to hold the property until they are back in town.  Really???

There are solutions out there for people that would still like to pay in cash but want the security of going through a reputable business.  Paynearme.com is one of these businesses.  Owners can setup a payment slip and the tenants can take that slip to 7-11 and pay in cash, they get a receipt, and there are multiple businesses that stand behind the fact that money was received.


Owners, why accept something that can't be really tracked?  If its for tax purposes you better look into something called Fair Rental Price.  Below is the definition from the IRS.  Using payment options that aren't trackable sometimes looks good on the surface, but you may just be asking for an audit.  If you property is worth $1000 as fair market rent but you are only renting it for $700 cash or are claiming that its not rented, well, they'll figure it out eventually.  Good Luck!

Fair rental price.   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area.

clogged toilet?

The dreaded phone call comes in that your tenant has a clogged toilet at 8pm at night.  What now?  So you scurry over to your rental property to determine if you can fix it.  You check it out, maybe even try to plunge it.  Nothing happens, still a slow drain and a gurgling noise.  At this point you have wasted over an hour of your time, time that you should be spending elsewhere.

You shrug your shoulders and tell your tenant you will call a plumber as they will need to snake the drain.  Giving your tenant the benefit of the doubt that there are likely roots in the main line which is causing the gurgling.  You finally get a hold of a plumber that will be there sometime tomorrow between the hours of 1 and 4 pm... and you need to be there to authorize work.  Ugh!  Now what?

So you take the afternoon off of work and wait for the 30 minute courtesy call that they are on their way.  You get the call!  You head over to the rental property and meet the plumber, the tenant says that the slow drain and the gurgling is still happening.  The plumber looks for the clean-out, but can't find it and you aren't sure where it is.  So the plumber goes to the roof with his snake.  30 minutes later he comes down with a child's small toy that had been flushed down the toilet.  OK, not great, but at least its fixed for a couple of hundred dollars and not tree roots.  The plumber goes back inside to test the toilet and comes back out with bad news... still won't flush!

So now the plumber says, do you want me to pull the toilet?  That's another charge.  You shrug your shoulders and say yes, because what else are you going to do.  The plumber takes his snake inside and pulls the toilet.  He starts his snake and out comes a headless child's doll covered in toilet paper from about 1 foot down the pipe.

Now the plumber comes back out and says, here is what I found.  Since the toilet is off do you want me to camera the drain in the case there are more items down there.  Of course you say yes, cause if he puts the toilet back then has to come back to do it that is another charge.

Plumber comes back out and says the camera showed nothing else is in the drain.  You sigh and he fills out his paperwork along with charges of around $300-400.  He puts in his report the issues and the apparent abuse caused by the tenant.  You ask him to put as much detail in the report as possible so that you can charge back to the tenant, and he obliges and says good luck with that.

At this point you are into this little project for over 4 hours of your time, half a day off work spent standing outside of your rental, and a few hundred dollars because your tenant's child decided they didn't want their toys anymore.


And people say Property Management is to expensive.

Granted you still probably would have paid the plumber, but at a discounted rate.  The soft costs are your time, energy, paid time off, and the stress of the situation.

How to fix a hollow tile

There are always various items that come up in maintaining a property and this is one that will affect tenants and homeowners alike.

The Problem - there is a loose tile right in the middle of your floor.  Now this won't probably have to much affect on you until it breaks, but it can be annoying and also time consuming to pull the tile up, scrape all of the adhesive and put it back down.  You will likely break the tile and make cause a larger mess if you attempt to pull it up.

There is an easier way - with a product called fix a floor that can be found at major home improvement stores.

I have used this product many times for hard to reach tile fixes.  The process is very simple.

1. drill holes in the grout surrounding the tile.
2. vacuum up any loose grout from the holes.
3. use the fix a floor product via a caulk gun (instructions are on the package)
4. put a heavy weight on the floor for 24-48 hours
5. grout over the holes that were drilled into the grout.

There are many videos on how to use this product on YouTube.  Just another fix quick tip from Kajuka Properties.**Please consult a professional if you are unsure of the process.

Hurricane Season: Tips for Tenants and Landlords

Florida has long been called a tropical paradise. With the warm weather and beautiful waters also comes the risk of tropical storms and hurricanes. Here are a few suggestions regarding preparing your rental investments for hurricanes:

Safety Comes First

Most of Florida is scattered in lower elevation areas prone to flooding, aka flood zones. Living close to the water often results in mandatory evacuation zones should a storm hit. It is advisable to provide this information to tenants so they can prepare to evacuate, if required. It is also recommended to advise where to obtain local evacuation routes and emergency response numbers in addition to local resources tenants can rely upon to provide expert advice should a storm hit. As a tip, providing a cheat sheet taped to a kitchen cabinet door including local numbers, sites, and necessary information is always helpful.

Protect the Property

This information should be covered a few times. First, ensure details regarding landlord and tenant expectations should a storm hit are clear in your lease. Your lease is a contract that legally sets the stage should issues result. Tenants should be advised if it is their responsibility to pick up and secure yard and outdoor debris prior to a storm. This should be communicated multiple times: at move in, within your lease, tenants handbook, taped to a kitchen cabinet door (along with emergency  numbers), and prior to hurricane season. Having expectations set is the first step to preparation for both tenants and landlords. If the property has hurricane shutters or requires boarding up of windows, it is common for landlords to request tenants to secure window; however, it is in the investor’s best interests to ensure the property is secure. Some tenants are not capable of lifting heavy boards or going to great lengths, such as climbing ladders, to secure hurricane shutters. Wind straps and hurricane shutters also provide the deepest discounts and improve the chances your investment will survive a storm. It also provides your tenants’ confidence their safety is your highest concern. Paying a professional service, such as a property maintenance firm, is another option to consider if your tenants need assistance. Regardless, it is recommended to confirm action has been taken, whether by the tenant or at the investor’s expense. After the storm, it’s the investor who suffers if damages result so preventative measures factoring the tenant’s capabilities are highly advised.

Make Sure You Have the Right Insurance for Hurricanes

It is advised to have a good conversation with your insurance agent to fully understand the variety of insurance coverage available both in general and in particular to flooding and hurricanes. There are many factors to consider so make sure you fully read the policy before you sign as policies will cover only what is listed. This goes for both property insurance and renter’s insurance. It is also highly advisable to ensure your tenants are aware of the insurance they need to cover their belongings both in general and due to flooding or a hurricane. It is also highly recommended for property owners keep a record of all interior and exterior pictures should they need to file a claim for insurance. This also holds true for tenants regarding personal contents.

While preparation is key in terms of success to weathering a storm, setting the right expectations up front and having a clear communication path with your tenants is equally as important.

Rental Owner prep items

Below are some of the items that you as a rental owner should be ready to resolve prior to a new tenant moving in.  All of these items are minimal cost and will eventually have to be rectified even if you put a tenant in with them not working properly.

• Lights - Do all of the lights in your house work?
• Fans - Are all of your fans operational?  do they have all required blades?
• Thermostats - your AC may work great, but if the thermostat doesn't work properly it won't make much of a difference.  Make sure the temp is measured correctly, and that the heat and air turn on properly when you move the temperature setting
• Windows - do they all open?  do they leak? do they all lock?
• Doors - do all doors shut properly?  Do all door handles twist properly?  Are all locks functional and have corresponding keys?
• Exterior Spigots - Are they functional?  Are the handles in one piece?
• Paint - has it been a few years since it was painted inside and out?
• Doorbell - Is there one?  If so, does it work?
• Smoke Detectors - Do you have the proper number and in the proper rooms?  Are they hardwired with battery back up or just battery operated?  Are the batteries up to date?
• AC Tune up - when was your AC last checked out by a professional?
• Water Heater - when was your last check up, when was it last flushed?
• Leaky Pipes/Sinks - are there any active leaks under the sinks?  These could come from pipes, connections, or sink drains.
• Pests - when was your last termite fumigation?  when was your last bug spraying?

*** not a comprehensive list