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What the hell is a perc test?

By: Mark Podolsky | April 28, 2011

A percolation test (from percolation, colloquially called a perc test) is a test to determine the absorption rate of soil for a septic drain field or “leach field”. The results of a percolation test are required to properly design a septic system. In its broadest terms, percolation testing is simply observing how quickly a known volume of water dissipates into the subsoil of a drilled hole of a known surface area. While every jurisdiction will have its own laws regarding the exact calculations for the length of line, depth of pit, etc., the testing procedures are the same.

In general, sandy soil will absorb more water than soil with a high concentration of clay or where the water table is close to the surface.

Testing method

A percolation test consists of digging one or more holes in the soil of the proposed leach field to a specified depth, presoaking the holes by maintaining a high water level in the holes, then running the test by filling the holes to a specific level and timing the drop of the water level as the water percolates into the surrounding soil. There are various empirical formulae for determining the required size of a leach field based on the size of facility, the percolation test results, and other parameters.

For leach line testing (the most common type throughout most of the country), a minimum of three test holes are drilled, most commonly six to eight inches in diameter. Ideally, these should be drilled to different depths from three to six feet below the surface. For better, more conclusive results, five drill holes are used in a pattern of one hole at each corner of the proposed leach field and one test hole in the center. Testing of these holes will result in a value with units of minutes per inch. This value is then correlated to a predetermined county health code to establish the exact size of the leach field.

Testing for horizontal pits typically requires five to eight test holes drilled in a straight line, or along a common contour, from three to ten feet below the surface. Testing is identical to leach line testing, though the end result is a different type of septic system, established through a different calculation.

Vertical seepage pits are slightly different in testing methods due to their large size, but the basic testing method is essentially the same. A hole, typically three to four feet in diameter is drilled to a depth of twenty or thirty feet (depending on the local groundwater table), and a fire hose is used to fill the pit as quickly as possible, and then, again, its dissipation rate is observed. This rate is used to calculate the size and number of pits necessary for a viable septic system.

Finally, for leach line systems and horizontal seepage pits, a “deep hole” is drilled to find the water table or to approximately twelve feet (dry). Exact depths will again depend on local health codes. In the case of a vertical seepage pit, local groundwater data may be used, or if the drill hole reaches groundwater, the pit will be backfilled again according to county health codes.

Septic System

I know thrilling stuff right?  Well, when you are building your toilet for your rural land you’ll want to make sure that your soil percs….  If you want to learn more about septic systems click here

 

 

Want to test the market without any risk? Option it.

By: Mark Podolsky | April 26, 2011

An option is defined as the right to buy something within a certain amount of time at a certain price with certain terms. But you have no obligation to follow through and buy it.

Example of a Simple Real Estate Option:

Let’s imagine you want to build a home on a piece of land that is for sale for $25,000, but you are not sure you’ll be able to. Since you don’t want to lose the opportunity to build on this particular piece of land, you decide to try to “tie it up” with an option. You tell the seller you might want to buy it for full price, but you are not sure about your financing yet.
You explain that if he will give you an option to buy it at $25,000 within the next six months, you’re willing to pay an option fee of $1,000. You don’t have to buy it, but if you don’t buy it within that six months, he gets to keep the $1,000 – and presumably sell it to somebody else. If you do buy it he gets his full price plus that $1,000 (although sometimes the contract is written so that the option fee applies towards the purchase price).
Now lets go one step further with this example. You add “or my assigns,” “or assigns” or something similar (ask an attorney) after your name on the contract. This means that if you can’t buy the property, you can assign the option to somebody else, and they can buy the property according to the terms of the contract. In other words, they can take your place in the deal. You can let your friend buy it, or you can assign it for a fee to someone, and maybe get your $1,000 back.

However, raw land in this market is even better since the seller’s don’t have tons of buyers knocking down their doors looking to buy like they were a few years ago.  As a result, you have much more flexibility in your terms.  I’ve tied up property for 180 days with a $100 option and still asked for a discount on the price.  If you’re short on cash, this is the best way to test the market and find a buyer at a higher price then your option price and do a quick flip.

Many times an option will expire and nothing will have happened – you didn’t find a buyer for it. That means you lose the option fee. That is the primary complaint that would-be options investors have against this strategy. On the other hand, those who know how to work this game just play the odds and don’t worry too much about losing several small option fees to win an occasional huge profit.

Historically, there may never be a better time to dip your toe into the real estate market without having a lot of money saved up for a down payment.   Take advantage of it and exercise those options.

 

Why You Should Own Land in Nevada

By: Mark Podolsky | April 25, 2011

 

Land prices have plummeted back to earthly levels since the great real estate bubble burst in 2008.   Three states have been hit the hardest (after they had the largest run up in values) they are Florida, Arizona and Nevada.  Well, now that prices have declined more 70% since their highs it’s time to take a closer look at investing in Nevada again.  Why?

In Nevada there is no personal or corporate income tax, no inheritance or gift tax, estate tax, and extremely low property tax.

‘Nuff said.

So which State do you think would have the greatest long-term appeal to the wealthy?

 

Tax Lien or Tax Deed?

By: Mark Podolsky | April 22, 2011

I get questions all the time about buying land at tax sale auctions.   As one means of generating lost income from delinquent taxpayers, county governments offer Tax Sales at auction to the public. During Tax Lien Sales, what is purchased at these auctions is not land, rather a debt to be collected on. By purchasing the right to collect past due taxes, a buyer is in essence loaning money to the property owner to pay their taxes.

A Tax Lien, or Tax Certificate Sale is a public sale, usually at auction, of the right to collect on a delinquent taxpayer’s debt. This sale is held by the County, generally once each year. What is purchased by the winning bidder is not the deed to a property. The purchaser’s money pays the delinquent taxes to the County on behalf of the delinquent property owner. In exchange, the purchaser is given first lien position on title, ahead of mortgages, deeds of trust, and judgments, subordinate only to State tax liens.

Under the terms of the sale which may differ greatly from county to county, if the debt is not repaid with interest (rate determined at the time of sale) within a specified time period, the purchaser of the tax lien may foreclose upon the property, and all junior (subordinate) liens are dissolved, forgiven, or otherwise not the responsibility of the purchaser.  In Arizona the maximum interest rate is 16%.  Click here for an investing primer on Tax liens.  By the way, if you google tax lien investing there is no shortage of websites looking to sell some program to teach you how to invest in tax liens for a princely sum.  Basically, they will tell you it’s a great “secret way” to make 16-25% on your money.  They won’t tell you about the inherent risks necessarily.

My take on Tax Lien investing… Skip it.  You will make over 100% on tax deed investing.  What is a tax deed sale?  A Tax Deed Sale is a public sale, usually at auction, of the deed to the property of a delinquent taxpayer. The Owner and all lien holders have been given ample time and have received proper legal notification that the property will be sold if due taxes are not satisfied. Different than a Tax Lien Certificate Sale, the winning bidder purchases the deed to a piece of property, becoming the new owner and obtaining all rights to the property free and clear of liens, mortgages, deeds of trust, etc.

I have been to many tax deed sales and have flipped the property and made 100-300% returns consistently.  The buyer is getting a great deal and since most people don’t attend raw land tax deed sales you can pick up lots and acreage for literally pennies on the dollar.  I’ve seen property sold for $3 at a tax deed sale.  Seriously.

Let me know if you want to learn more.

 

How Not to Get Sued in Real Estate

By: Mark Podolsky | April 21, 2011

Let’s get real.  The old adage in Real Estate is, “It’s not if you’ll be sued its when you’ll be sued…”  So from a practical standpoint someone is going to feel like you have money and would be a good target for a law suit.  Nevertheless, in the past 11 years of working in real estate I’ve never been sued.  Threatened once, but never sued.

Want to know the secret?  It’s not setting up LLC’s for each deal or having a downtown law firm on retainer.  It’s always doing the right thing.  Always.  The customer you are dealing with may be wrong, irrational or just plain mean.  You can’t control what other people will do, but you can control your reactions to them.

You know how to react?  Get them out of your life as quickly and happily as possible.  Give them whatever they want (out of the deal and a total refund is usually what they want).   It’s cheaper and easier than a lawsuit.  Not to mention the negative mental energy removed from your life.

I have a simple business philosophy.  Life is too short to have an angry customer.  Always settle.  Never litigate. Ever.

Everyone Loves Water

By: Mark Podolsky | April 21, 2011

As I sit in my office I have a beautiful lake view.  I watch the ducks out my window swim to and fro the various birds diving and soaring above and around the water.  I enjoy watching the joggers, rollerbladers, bikers and walkers make their way around the lake.  The beauty of the sun’s gleam as it bounces off the water’s reflection seems to calm my active mind.  The constant slow roll of the ripples makes for a peaceful view.  Does it help me be more productive?  I’m not so sure, but it is hard to be in a foul mood while looking at a beautiful lake.

When I look for land investments if I have to spend a little extra money to be near a lake or on a lake it’s always paid off for me.  People are drawn to the water and always will be.  I love the mountain views as well and if you can combine water with the mountains well it doesn’t get much better than that for me.  Nevertheless, even if you have to pay a bit of a premium to have that water view figure out a way to make it work.  Be creative.  Have the seller finance if you don’t have the cash.  Many sellers today are cash strapped, but it never hurts to ask what it will take to make it work for both of you.  Most sellers want a sale and if you’re reasonable they’ll most likely work with you.

Be aware of any flood plane issues on the preliminary title report though before closing the deal.  Once everything checks out you’ll have a solid investment that is almost guaranteed to increase in value as people will always be drawn to the tranquil nature of water property.

 

 

Home Ownership is Going to be for the Minority

By: Mark Podolsky | April 19, 2011

I just read this article about a new proposal for lending standards for prospective homeowners:

“The rule would establish minimum underwriting standards for most mortgages and lenders could be sued by the borrower if they do not take the proper steps to check a borrowers ability to repay the loan.”

If you think underwriting standards are tight now just wait until this bill passes…

 

The Beauty of Control

By: Mark Podolsky | April 18, 2011

In a recent survey on happiness people ranked a sense of control above money and prestige in their jobs.  Well, why would so many investors buy stocks, bonds, or  mutual funds, etc. when in reality they have absolutely no control over so many different factors of the investment.  They can’t control management, can’t control the products or services offered, and certainly can’t control the market in general.  It’s a completely passive investment where you are at the mercy of hundreds of different factors that may or may not make your investment lucrative.  Raw land is completely the opposite.  You have almost complete control.  You research and pick out the desired location,  how large the parcel, you can choose or not choose to make improvements, you can talk to the County officials about companies that may be looking to grow out your way, etc.  In essence before you buy raw land you have the complete picture on the investment.   Of course, you can always live on it, camp on it, use it recreationally as well and you still have complete control.   The new equation is land + research= control.   I think there is room for people to invest money in the stock market, but they should at least be aware of how much control they are giving up prior to making that investment.

Making Money in Your Sleep- How to make a Passive Income on Raw Land

By: Mark Podolsky | April 15, 2011

I sell raw land for a living, but really I could do this part time and so could you.   The truth about raw land is that it is literally the only thing that will last.  Companies will come and go, all of your possessions will become obsolete and or break, you will eventually die and your heirs will inherit the land, etc.  It is the easiest and ultimate real estate investment.  That being said, most people don’t associate raw land with an income producing asset.  I just recently blogged about a myriad of ways to make money off of your land, but the easiest way is just to owner finance.

Here are the steps:

#1.  Save at least $150 a month to buy raw land. (There are tons of ways to get the property, but we have it ready for you)

#2. Flip your purchase for at least double your payment.  So if you are at $150 a month adjust the terms to $300 a month and voila $150 a month passive income. (you will just copy our contracts)

#3, Repeat.

It’s just like anything else in life where you acquire wholesale and sell at retail.  Most people can afford $300-$500 a month on raw land.  Your job is to finance it at much less (wholesale).  Your cash flow doesn’t get hit with a big cash purchase and if your buyer defaults it won’t be hard to resell it.

Do your research and acquire property that’s compelling and the larger the acreage typically the better.  I prefer 40 acre properties, but even a nice 5 acre parcel will sell faster than a half acre lot.   We can provide you the acreage on easy terms of $99 – $249 a month and you can put the property up on the MLS or craigslist and flip it at the higher price point.  We have many investors doing that with us already and you can too.

Let us help you start making money in your sleep.  It’s better than watching Three’s Company re-runs all night I can guarantee you that!

 

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