Tax Purchases
Is it true that most county tax-sale opportunities are dominated by a handful of "tax investors"?
Although it is allegedly a simple process, is it really worth the effort. I know of one man alone who takes out a $2.5 million lien on his house to buy taxes- can little people really compete with that?
Mur----------------
Yes, they can compete. However, it is not as easy as it used to be. There are are lot of wall street firms that bid at the tax lien auctions with large numbers of liens for sale. They drive down the returns for everybody. They will typically settle for an 8% return. If you are willing to accept less, you might be able to buy some liens.
They are not at every county tax lien auction however.
And, as far as I know, they do not attend the tax deed auctions. These are sales where there is no lien sold, just the property. So, if you want to buy properties rather than get an investment return with liens, you can do that in states where no liens are sold.
I have acquired 11 houses at the past 5 Oklahoma county tax resales. This is a sale of the property for delinquent property taxes when nobody bought the tax lien from the county. I have paid $1200 to $19,500 for these houses, although I have had to pay more money to fix up some of them. A great deal more for some of them.
So, what do you want liens for investment or deed to properties? If you want liens for investment, pick counties where there are fewer liens sold, the "big buyers" are likely not to show up there. Call the counties ahead of time and verify that they don't have the "big boys" showing up their sales. If the "big money folk" do buy in a particular county, don't go there--go someplace else.
Understand that there are a lot of "little people" showing up at the sales these days also. So, there is no guarantee that you will be able to place as much money as you would like in tax liens.
Good Investing*******Ron Starr************
Thank you. I'm in metro Chicago so maybe I'll go to some of the surrounding counties. I wonder what the rules are so I'll have to ask some right questions when I call. The tax assessors office is where I will begin.
PS IT is great to see that this site works so well.
Happy holidays!
Try going to a smaller county and there is usually less competition. I think there is plenty to go around in the Chi-town area. I am looking into it myself. Only a short drive for me! I might see ya there mur! Good luck.
Some suggestions for Illinois auctions:
1) Most of the counties in the north and northwest area of Chicagoland are heavily attended by large investors. That can be OK -- just be aware.
2) The returns in there areas are pretty bad. I've seen many, many properties go for 0% - 2%. At those rates you really have to do your homework or you can get burned. I attended the auction this year and invested over $13K and got somewhat burned on a $300 lien. As I was careful, I'm sure many investors got taken for more... So be prepared.
3) Most of the counties I have researched have the auctions in late fall (early November). So unless you are going to buy the "left overs", the action is pretty much over until November next year.
4) I don't know about other states, but Illinois has many legal requirements that must be followed for servicing tax liens -- but sure to read up on the procedures to follow, or you could loose $....
Best wishes and let me know how you make out.
Glenn
[addsig]
What do you mean that it could cost you alot of $____________?
How exactly? You buy taxes adn teh house is bad or are their liens or what?
mur,
not sure what that meant, about losing money, but I do know that there are deals to be had even after the big sales. you just need to do your research and make sure you check out the property! You can never be to sure. Ask questions of everything and even check with neighbors and the such. If the big sale is dominated by the big guys, then find a different strategy. I'm not sure you can lose money in Tax liens, but you might not make as much on them as you want, due to many factors. Just remember, Do your research! Good luck
It is hard to lose money at a tax lien due to the fact your return has a % return above your initial investment. The tax deed sale is somewhat different and there are very strict conditions to follow and costs upward of 2-3K per parcel for legal fees and taxes going forward. Do your home work and have cash and time to wait out the redemption periods.
After a few tax sales and deed sales the system begins to snowball and over a few years you will be able to make a living at it (or at least enhance your cashflow).
Time, education, money and patience are the key to success in this area!
You are so right JFlorentine! Knowledge is the key to any investing! Good luck and let me know if I can be of assistance! I am planning to work into the Tax Liens in southern IL, soon!
Quote:
On 2003-12-30 08:55, JFlorentine wrote:
It is hard to lose money at a tax lien due to the fact your return has a % return above your initial investment. The tax deed sale is somewhat different and there are very strict conditions to follow and costs upward of 2-3K per parcel for legal fees and taxes going forward. Do your home work and have cash and time to wait out the redemption periods.
After a few tax sales and deed sales the system begins to snowball and over a few years you will be able to make a living at it (or at least enhance your cashflow).
Time, education, money and patience are the key to success in this area!
I thought that you were suggesting that one can lose money if they are not careful. Thanks to the response out there I think that you meant that the houses can have issues such as too much property damage or that tax deeds cost thousands of dollars to handle- I've been quoted $5,000-$10,000 for lawyers but to have at least $15,000 set aside for tax deed transfer. However, I admitted that I was interested in getting into the tax redemption business and then asked for a quote. The moments of silence that ensued from the attorney and the "investor" who works regularly with tax deeds made me leary. I would cherish the opportunity to have a knowledgable attorney with honest fees but it seems like the biggest challenge of all.
Thanks
Quote:
On 2003-12-29 22:18, mur wrote:
What do you mean that it could cost you alot of $____________?
How exactly? You buy taxes adn teh house is bad or are their liens or what?
Thanks. I was getting a little intimidated by all of this tax stuff.
I was quoted tax deed costs at $5,000 to $10,000 and that I should have at least $15,000 on hand to complete a tax deed purchase.
mur
Quote:
On 2003-12-30 08:25, pejames wrote:
mur,
not sure what that meant, about losing money, but I do know that there are deals to be had even after the big sales. you just need to do your research and make sure you check out the property! You can never be to sure. Ask questions of everything and even check with neighbors and the such. If the big sale is dominated by the big guys, then find a different strategy. I'm not sure you can lose money in Tax liens, but you might not make as much on them as you want, due to many factors. Just remember, Do your research! Good luck
Quote:
On 2003-12-30 08:25, pejames wrote:
mur,
<Snip>
I'm not sure you can lose money in Tax liens, but you might not make as much on them as you want, due to many factors. Just remember, Do your research! Good luck
In Florida, you must redeem your certificate within 7 years (bring the property to a tax sale.) or your certificate becomes null and void. If you paid the taxes (bought a certificate) on a less desireable property, there may be no bidders at your sale. As a result, you could end up with a property that nobody wants even just for taxes. If you determine that you bought a certificate on a property like this, the only thing to do is to wait for another certificate holder to bring it to a sale. At least that way, you will receive your original investment plus the interest that you are entitled to. This just has to happen before your seven year period runs out.
The time table is different in each State. Alabama is 3 years (I think).
loosing money at tax sales.
...buying a parcel that's 1 foot wide, 200 feet long
-is a cliff
-swamp
-environmental hazard
-over priced
-etc, etc, etc
-overpaying for any piece.
There are some properties that you shouldn't take even if they're free.
I know of investors who have bought at tax sales, and then defaulted on their taxes just to get rid of them.
Thanks.
This website is GREATTT!
mur
Quote:
On 2003-12-30 11:53, mur wrote:
Thanks. I was getting a little intimidated by all of this tax stuff.
I was quoted tax deed costs at $5,000 to $10,000 and that I should have at least $15,000 on hand to complete a tax deed purchase.
mur
Quote:
On 2003-12-30 08:25, pejames wrote:
mur,
not sure what that meant, about losing money, but I do know that there are deals to be had even after the big sales. you just need to do your research and make sure you check out the property! You can never be to sure. Ask questions of everything and even check with neighbors and the such. If the big sale is dominated by the big guys, then find a different strategy. I'm not sure you can lose money in Tax liens, but you might not make as much on them as you want, due to many factors. Just remember, Do your research! Good luck
Here are a few way to lose money in
TAx LIANS. all would be you do to
your making. #1bid only on property
that your can pay the tax for.#2 look at the
property to see that there are( f
land fiill,flood plan,not buildable)
#3 is not knowing now to do the legal
would to get title if they do not pay there
tax. interest is great owner is heaven
it is very inportant that you do some looking a the property and the laws of
your state and sometime the county that
the sale is in. like anything else in this world knowlage go a very long way
and will save any loses,
[quote]
On 2003-12-30 11:47, mur wrote:
The moments of silence that ensued from the attorney and the "investor" who works regularly with tax deeds made me leary. I would cherish the opportunity to have a knowledgable attorney with honest fees but it seems like the biggest challenge of all.
Thanks
[quote]
You should have felt leary and then some, in illinois, the Chicago area, there are only a handful of attorneys that specialize in the conversion of a tax certificate to deed, and they are not cheap. This is what they do and they know that most individuals have no clue as to the process, and this is how they make their money as attorneys. Helping their client achieve a goal.
As always you should do your homework, regarding the entire process of tax buying, this includes: understanding that you need to be informed about the parcels before the sale, what it takes to convert the tax certificate to a deed, what receivership means, and the slew of court appearances and legal filings those attorneys will need to file on your behalf. So, to some extent their fees are almost justifiable. If they are not completely unreasonable.
Personally, I have witnessed investors buy tax certificates from an investor and thought they were "getting skrewed" mostly because they entered the situatiom with unrealistic expectations regarding the tax sale process. Like many have pointed out here one must have firstly the money to invest long term with tax certificates and also have an understanding that this is not a quick flip area of real estate investing.
Just my two pennies worth for this topic.
All the best!
Thanks for your input about what could go wrong and the attorneys that work tax certificate conversions. I'd like to know how to do it myself. In the meantime, Where are these attorneys listed and what heading are they listed under?
mur