Truth About Tax Liens/deeds
just so all of you know the resion there is such high returnes is that there is such a high risk of not geting your the capital invested back.
this is not a gold mine if it was the goverment would not have to offer such high rates this is to get people to take the risk . if it was a safe investment you would have large firms investing in these propertys but its not and people selling you iformation like john beck are just trying to take your money and make a fast buck out of people that do not know about the investment world .
I want to throw in my two bits on tax sale risks, at least in TX, which I know best in this area.
The big risk I found, in buying a number of TX tax liens, was that the dirty bum tax payer would sneak in and redeem that tax lien before I could steal his property!
Of all I bought over several years, all I made was the 25% per year yield, plus getting my purchase price back...but not once did I get the property itself. All were redeemed within the 24 month redemption period.
But I guess that 25% per year isn't so weak, seeing what bank rates have been last couple of years.
Is due dilegence important, even if it's just for vacant lots? To me it sure is, but then, i've never been one to buy anything without doing research. I've only been to one auction here in MI (where we now get actual deeds, no more tax liens) and bought 3 lots. Before going to the sale, i spent 3 days driving around looking at lots/parcels i was interested in. Ron's definately right: many were postage stamp sized, swamp, had railroad tracks thru the middle of them and one even was 15 by 35 feet on one side of a road with 15 by 15 feet on the other side! UGH! They all had plat numbers and lot numbers and, at one time, had been real lots but over the course of splits, etc, had become undesireable.
That being said, i did find many good parcels like 40 acres with a creek on a main road, (too much for me, it sold for 40k though)
One of the lots i bought there was only one other bidder interested. I paid $640 dollars for it and sold it this January for $16,000. It was a steal at that, price too! I paid the $1200 to get a warranty deed and this spring the new owners are building a retirement home on it. They're happy, i'm elated and have since used that money to purchase a rehab for $13k. After 3 months and $7k of work, it's now worth around $45k.
Tax sales require care, selection and caution but there are great opportunities with little risk if you do your research.
Just my thoughts, thanks for alowing me to brag alittle bit. It still amazes me!
becki
There actually ARE large firms buying these things up on behalf of investors. I bought 4 liens at an auction in 1994. 3 redeemed (with interest) and one never did. We paid $200 to get the deed and now we have a piece of undeveloped land worth about $16K. Not bad.
I read somewhere that also banks are buying a lot.
Selling a book or course is extra money for them, as some celebraties do. Why do you think Jenifer Lopez selling parfume? Why Chanel has also makeup line?
But of course there are always some con artists, too.
gnhoj2004---------------
As this is a free country, you can state your opinion. But I sure wish you would state that it is your opinion. Also, give us some background on you so we can judge somewhat your expertise in this area.
From what you have posted, it sounds like you have never been involved with investing in tax liens or tax sales. And you have never even read any details about it. Otherwise you would not have written only nonsense, as you have.
I have bought several houses on tax sales, for very good prices. I have made good profits on properties that I have bought and resold. I live on the rents I get from properties that I bought on tax sales. So, I do know what I write about. You don't.
Good Investing*********Ron Starr***********
Wachovia bank spent HUGE dollars at the last one near me in Maryland... more than all other buyers combined...
I will look it up and post the amount.
Of course there is risk in investing in tax deeds, but it doesn't mean you shouldn't do it. There is risk in purchasing a home the traditional way, but that doesn't mean you shouldn't do it.
Do your due dilligence to minimize the risk. No highly profitable investment is going to have a 0% risk factor (in my own opinion).
I have personally profited on my tax lien/deed investing.
-GWJr!
Jesus, don't discourage me! Let me get started first!
can anyone tell me how I can get information about local tax lein sales and where i can get the local tax lein laws?
Thanks
Tax liens/Deeds vary from state to state on the laws and redemption periods. The risk is minimal because you will either own the land or you will get your initial investment plus a percentage back. The most important thing is to know what you are investing in. Make sure it's not SWAMP land! Please be aware of all the laws and rules involved with purchasing tax property in your state. Just an example. I bought a house in Arkansas and I paid $2,500 for it. However, the state recommends that you do not do significant repairs within a two year period because the owner has that time to redeem the property if they weren't properly notified. Most of these properties will need repairs to have the property habitable. Meaning, I can't rent it or live in it without doing repairs. In the meantime you are paying taxes and doing yard work for two years. (which can be costly if when you are not getting any return on the property) After the two years to get a deed that is insurable by a title company (needed if you want to get a loan against the property or sell to someone who is not purchasing with all cash) you will need to get an attorney to quiet the title. This will run anywhere from $1,000 on up depending on how easy or hard the process will be. So, be fully aware. :-?
jfalkowi--(NY)-----------------
The state statutes of every state are on many sites on the internet. You can read them there. However, you are best advised to go to a local law library and read the "anotated" copies of the law, which includes not only the statutes--"black letter" law--but also the court decisions about issues related to the law.
Check out the web sites of the county treasurers and auction companies. Do a google search for tax auctions in New York state. There are a lot of sales, you will find some, surely. Also, www.taxsalelists.com lists some sales.
Good Investing**********Ron Starr**********
when you purchase a tax lien and it is not paid by the owner do you go into foreclosure with the bank? How does the bank get the money still owed to them from the mortgage?
gsrgirlie--(NY)-------------
That would be a matter of state law.
Usually when you try to convert a tax lien to a tax deed you have to serve the lenders and other lien-holders or notify them of your intent to get a tax deed. Then, they have the choice to pay the delinquent property taxes and attempt to recover the money from the property owner, or they can let the property go, foregoing getting paid by foreclosing on the property.
Most properties with delinqunet property taxes probably don't have lenders on them. At least in some states, such as CA, the lender usually pays and forces the owners to reinburse them or face foreclosure.
Good Investing*************Ron Starr***********
[ Edited by DariusBarazandeh on Date 01/31/2005 ]
when you stated that large firms don't invest in tax liens, you are obviously uneducated to the tax lien world. Bank Atlantic, Key Bank, Transamerica, Coast, Plymouth Financial, Mooring and scores of other companies spending millions each year on tax liens. Wachovia (First Union) doesn't buy liens they act as trustee for Mooring in MD, sort of a leverage agreement situation. Tax liens offer a nice return on investment, but just like any other investment there is risk, but if you do your due diligence you can minimize the risk. My company has been buying tax liens since 1996 in DC, NJ, FL, MS, and MD and have been very happy with our results, but I hope that everyone believes the originator of this topic and does not buy tax liens, I don't need anymore competition than I already have.
Darius,
refreshing intelligent advice and commentary in an industry filled with Ted Thomas' and other snake oil salesman marketing to get rich quick wannabes.
My best, Dave
Quote: After the two years to get a deed that is insurable by a title company (needed if you want to get a loan against the property or sell to someone who is not purchasing with all cash) you will need to get an attorney to quiet the title. This will run anywhere from $1,000 on up depending on how easy or hard the process will be. So, be fully aware. :-?
I am looking at purchasing a tax deed at auction here in PA is that something that I will need to have done? quiet the title? Would a title search done before alleviate this? I would like to learn how to do title searches myself for peace of mind does anyone have a link to learn more?
Thanks
You next task will be to learn about searching title records. My belief is that for your first 5 deals you should hire a title company to abstract titles for you. After you get your feet wet and if you decide that this is something you wish to pursue then consider learning to search titles yourself. I know of an excellent program that teaches you how. In the alternative you can hang around the recorder's office and talk to title abstractors.
_________________
Ok, where can I get this software from? I want to learn how to do my own title searches.
My strategy is to obtain the deed to a property by bidding at an tax deed auction.
Can you explain to me why it is difficult to get title insurance on these types of properties and how I should go about getting this insurance/
Quote:
On 2004-03-08 09:31, lassitermarketing wrote:
There actually ARE large firms buying these things up on behalf of investors. I bought 4 liens at an auction in 1994. 3 redeemed (with interest) and one never did. We paid $200 to get the deed and now we have a piece of undeveloped land worth about $16K. Not bad.
lassitermarketing,
Are you saying the unredeemed tax lien certificate became a 16K valuable piece of raw land? Sounds good (for an apparent loss)!
-------------OK, ONE link: The state laws, supposedly several, that will tell me about tax liens locally.
----and----
How to research at the recorder's office? I was there the other day, took prodigious notes, left lost!
Alan
Also, What's all this about due diligence? You're paying a small sum, and the property you may gain is ALWAYS worth more than the small sum.
Can someone please tell me where the "risk" is, other than evident stuff mention already, such as clearing title, getting insurance, rehabbing to code.
Perhaps acquiring a totally unsellable house due to location could fit this, and yes, swampland with negative grass growth is a drawback to flipping.
Is it that the true property owners redeem? And we don't get our money back?
Alan
Here is link to an article I posted on this site. Its fairly general and your investment state may have more risk issues or less. Some people favor less research for tax lien certificates but more for tax deeds. I completely agree with that statement. However at a bare minimum you should be aware of bankruptcy issues, evironmental liens, state tax liens, and FDIC held liens in the tax lien scenario. Here is a link to the general article:
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=547&mode=&order=0&thold=0
_________________
Warmest Regards,
Darius M. Barazandeh, Attorney at Law / M.B.A.
NOTE: Any material found on this discussion forum or email with Mr. Barazandeh is for educational purposes only and does not create an attorney client relationship.[ Edited by DariusBarazandeh on Date 04/29/2004 ]
fearnsa--(OK)---------------
Over 90% of the properties that endin a tax deed are vacant land. There are few houses. Those properties that are improved often have extensive damage and need a lot of repair.
There are a significant number of properties that are JUNK. This means little pieces which are useless, except to hold the world together. In November, 2003, I posted about the El Dorado County, CA, tax sale. Nov 8, I think. I recommend you read that.
Properties are on clifts, underwater, under freeways and highways. Properties have encroachment of buildings onto the adjoining properties. There are environmentally contaminated properties which will cost more to remediate than they are worth once they are clean. And, if you are the owner, you have to pay for the work.
In towns there are a significant number of the properties scheduled for sale which are vacant lots, although the assessor's office indicates that there are structures on them. The buildings were demolished by the city government. Then they put a lien on the property, often for $6-12K. So the open bid for this vacant lot is, say $7K and the value is $3K, say.
In many states there are liens which survive the auction. In OK the department of human services liens remain on the property after the tax resale.
So, go along with your breezy approach to investing in tax liens and tax sales if you like. Ignore the due diligance, if you wish. You can do it as you want.
It's good that you asked the question,I think. I hope I have provided a decent answer.
Good Investing**********Ron Starr***********
SOUNDS LIKE YOU HAVE A NEGATIVE RESPONSE BUT I AM A BELEIVER SINCE THIS IDEA OF INVESTING IN TAX LEIN CERTIFICATES WAS PUBLISHED IN AARP ISSUE FOR MAY /JUNE. i WONDER THO WHAT IS THE ADVANTAGE OF HAVING YOUR OWN WEBSITE AND BECOMING A MEMBER IN THE BEGINNING AND THE COST EFFECTIVENESS OF IT. wHAT IS THE DIFFERENCE IN GOVERNMENT TAX CERTIFICATES AND TAX LEIN CERTIFICATES AND WHERE WOULD YOU OBTAIN A LIST OF THESE PROPERTIES??
8-)
lilfrannymil--(NC)-------------------
Thank you for pointing out the AARP article. When tax liens are written about in a publication like that it means their best times are in the past. When everybody and her sister-in-law chases tax liens, the market shifts and the bargains decline dramatically. Perhaps to zero.
And this has been happening for the past three or four years, I believe. Understand that there are not very many properties that have delinquent taxes. In CA in the Mid-1990s, it was about 1.5% of all properties. And most of those do not go to tax auction. So tax liens and tax sales are a NICHE INVESTMENT. They are only good because and when there are few people competing for them. When the crowds show up, they are no longer a good investment.
One then either has to drop out of tax sale and tax lien investing or sharpen one's approach. For instance, by calling around to dozens of different taxing entities to find out what their recent experience is with their tax sales and what they expect in their upcoming ones. Then, go to only those which seem the most promising, even if they are only one out of ten or one out of twenty.
Or, switch your investing approach. Such as buy from the delinquent property owners before the auction. Then redeem and sell for a profit. Or buy from the owners, let the properties go to sale, and claim excess proceeds, if that is possible in the state--it is not in all states. Or buy liens and other obligations on the delinquent properties from their holders, pay the taxes, and do a foreclosure on your lien.
There are dozens of ways to make money with tax sales. Buying liens and deeds at the tax auctions and resales is probably one of the poorest ways to make money these days.
Now, about your question. You need to read already posted information. Right on this thread, in an earlier post, I gave the answer to your question.
There is a wealth of information on this forum. Study it for a while and you will learn a lot.
Good Investing*********Ron Starr************
[ Edited by RonaldStarr on Date 04/30/2004 ]
Ron, You may be right however, I bought for 43,000 and it is now worth 135,000 as is on a NC tax lein certificate so I beleive it can happen. I appreciate some negative feed back also but seems you are speaking of Texas which is very different than NC. I remember several years ago a person who owned 33 units in my Association Condos' ,declared bankruptcy (8yrs ago)and each unit was sold for 25,000 now they are selling for 135,000 and up. Keep praying! It takes a lot of effort but better than working 9-5.
lilfrannymil--(NC)----------------------
Now that you have mentioned this sweet deal, 67 people who read your post are already arranging their trips to North Carolina to bid against you at the next auction. Let' see, what is my travel agent's phone number? .... What airlines fly to North Carolina?
Yes, there are some amazing bargains with tax sales. And there will be more in the future. However, there will be fewer of them. It will become more difficult to make good purchases. It will require either more effort or else more thinking to come up with an angle to beat out the competition.
Even though I work tax sales and recommend them, even I can be surprised. I was startled last year when I bought two houses in one county for $1200 each. Before that, I had never bought a house for less than twice that at the actual auctions.
Good Going, Gal!
Good Investing********Ron Starr************
OOPS! I have a big mouth but they will be too late as this happened several years ago done deal there are plenty of leins for everyone. :-D
I Have never actually invested in tax property before because I have researched tax liens in the state of Kentucky. We are a tax deed state and I have found that if I purchase a tax lien, the owner does not pay, and I begin the foreclosure process. Upon foreclosure the property will go into auction to be sold. I probably would not have the chance to purchase the property because the auctions here are closed bids and I'm sure there will be other bids higher than mine. My question is, do all or most states operate this way? If not what states near me should I research? and I've been told that the governement will pay back the lien amount plus the interes that I have paid if the owner of the property does not, is that true in other states, is that actually true in Kentucky?
Any experienced insight would be great, I have never actually invested like this before.
Thank You
Spriddy
Spriddy--(KY)-----------------
I think you need to do much more reading on the state law.
You say that KY is a "tax deed" state, then you talk about in in a way that only makes sense if it is a "tax lien" state, not a tax deed state.
You suggest that the property is put up for public auction upon the conversion of the tax lien to a tax deed. The only state in which I have heard this occuring is FL. In FL the process is as you mention. I don't know how it works in KY, but I'd bet it is not as you mentioned.
I suggest you get into a law library and read the anotated state stautes on the topic of collection of delinquent property taxes and tax liens and tax auctions.
If the sale technique is as you stated, I agree that you might not be able to compete for a sale. However, you would get the interest rate or penalty return. I believe in KY that is 12% year. Far above what you could get in banks or money market funds.
Good Investing***********Ron Starr*********
LOL @ Business Woman, don't let the bumps slow you down girl!
*Darius, I'd like to know of this title research program if you'd like to share my 'X 'addy is in our profile...and to the person who started this post, keep hunting through all the info given, both here and on your state's website, if you get stuck, KEEP asking Q's, make a phonecall to your state office, they will help you too.
Alot of these places do have city leins for cleanup etc, among other things, some even worse too !
but John Beck didn't tell anyone to overlook checking this out did he? I can't say I personally know, as I have not done the course, but I'm sure not.
Meanwhile back in 'sticksville', the land we're waiting for deed on, is in a 'not touristy' area by any means, but it happens to be where hubby comes from and where we want to be., all our family still live in 'sticksville' too..and there sure there sure isnt much competition for it out there in XXXX Arkansas...and it's 120 acres for just our 5000K bid..
keep going, deals like these cant go wrong IF you do your homework, our new land ( should our bid be accepted ) is worth around $120,000..been delinquent since 1990
Happy Landings
Great information and interesting responses... As for the original poster, however:
How fascinating that you seem to have joined here for the singular purpose of being negative and stirring things up. I see you have made a total of one post. How very interesting that of all the subjects you could choose to learn about here, you chose instead to simply rant.
In fact, all you chose to do was to give a very negative opinion of something you clearly know very little about without even an attempt to ask a question or learn anything in the process.
Hmmm.... looks like a troll... smells like a troll.
I, personally, am very very new here myself, and can see that there are a great number of very different techniques which work for different individuals. I am constantly amazed at the depth of knowledge of the people on this board.
I personally do know of a good number of people who have done quite well at tax auctions... most of which do not own property as a result, but are quite satisfied with their returns nonetheless.
Tax Liens are not high risk in Illinois. I was retired with some time on my hands and done a lot of research. You should register at the Treasurers office and go to a sale as an observer. In my county people and yes, companies come from all over to bid on these deficient taxes. The main risk is if you don't do your paper work properly or at the right time. I followed one case of a sucessfull, experienced bidder through the county clerks office and just copied what he did, along with coping his forms and submitting my data. It's not difficult or risky. I have had a large number pay off right when I thought I was going to get a cheap property. Iv'e also taken deed to 2 properties. My advice is to research actual cases in your courthouse that have went all the way to being deeded to thy buyer and copy them after you have bocome winning bidder. It's 3 years of making sure you do the right paperwork at the right time. The only risks is when you do something wrong. If you stay on top of things you either get good interest on your money or a deed to a property. GOOD LUCK
BusinessWoman,Jesus has never discouraged anyone
TnTrash, I was not referring to Jesus. I was responding to the negative poster!
That person needs to do what I am doing....reading the threads and learning a whole lot!!
To the person who originally initiated this post. You obviously have never been to a bid-up tax lien sale (or tax deed for that matter). The tax lien industry is a billion dollar industry and most of the people buying all of the liens are bank representatives with check books worth millions of dollar.
If Wachovia Bank and Bank of Japan participate in these auctions, there must be a penny to be made here.
While I agree that there are people out there trying to make a dishonest big buck on this "newly found" industry (even though it has been around for years, I would recommend you participate one of these sales and meet some of the bidders. You're in for a big surprise.
Francoise