BiggerPockets

Greetings Tax Sale Investors:

Yesterday, I received the following question:
"Which States have the most favorable laws for Tax Sale Investors?

The answer to this question is a bit complex because laws vary from state to state. In addition, depending your Investment goals, as a Tax Sale Investor, the laws/statutes will pretty much dictate or govern the process. Also, seasoned Investors do typically favor certain states for various reasons. Here's a brief overview of some of the advantages when Investing in certain states:

Here is a link for Licking County, OH which gives a good overview of the statute and includes an upcoming sale: http://www.lcounty.com/treasurer/delinquent_tax_dept.php

In States where there are no redemption periods (States I personally like), as a Tax Sale Buyer/Investor, you can own the property usually free and clear. e.g. Alaska, Arkansas, California, Delaware, Hawaii, and New Mexico, etc.

If you desire, you can also Invest to Make your money/profits by looking for States that will pay favorable amounts of Interest.

Texas is a great State for this because there is only a 6-Month Redemption, and you can earn anywhere from 25%-50% ROI.
Best case, if the property is not redeemed, you get the property.

Also, Here is a Money Maker for You in Texas: Texas Tax-Resales
http://www.co.travis.tx.us/tax_assessor/foreclosure/resales.asp
(Be sure to notice the status of these: Many are "Available" for Immediate Purchase, meaning no-bidding up/competition)

Arizona(16% ROI with 3yr Redemption Period) - Here you can also buy Assignments (Unsold T.S. Certificates) Over-the-Counter/via U.S. Mail.
Goto: http://www.delinquenttaxsales.com
Then, Click-on Assignments

In essence, the states with the most favorable laws really depends on what you as an Investor is more comfortable with as well as how patient you are when it comes to Tax Sale Investing. Patience is really important where the redemption periods are longer. Otherwise, I would suggest states where the redemption period is short and/or where you can purchase property with no-redemption period(s).

I certainly hope that this answers your question. If not, reply and I will reply-back. Or, if you want to know about a particular state other that those aforementioned I will let you know what I think/know.

DelinquentTaxSaleInvestor,
GdH-

Greetings Juzamjedi,

In regards to your question concerning redemption(s): Based on the Three (3) Months that you stated: The short answer is Yes. You will earn interest on your money. One point to note: There are a few states that may only pay the interest to Investors after 30-Days only. Some, on the other hand, pay Investors the Interest instantly, meaning as soon as you pay the lien or purchase the certificate, you start earning interest on your money.

Your Best Strategy Is This: Prior to attending the Auction/Sale, Just ask for the rules and ask the person/office who is handling the sale if interest is paid as soon as the lien/certificate is acquired/bought, or is the Interest Earned paid some-time after. In any case, you will get Interest in almost every state after 30-Days. Most Tax Collectors, etc., if you ask, will let you know when you begin earning interest on your $$$ without referring you to an Attorney (not suggesting that you don't talk to an Attorney(s) - as they are very resourceful, if needed).

Based on that, I think this answers your second question: However, no the states are NOT UNIFORM in the time-to-redeem, or how redemption works. For example, Alaska, Hawaii, New Mexico, and a handful of other states have no redemption periods which means you can acquire the property immediately. With those states, you only have to wait until they mail/send you the deed.

One final note: All Counties Within A State are uniform in how the "redemption" works, but All States again are not. Remember each state Delinquent Tax Sales are guided by the statutory guidelines. Therefore, redemption-periods are subject to each respective States' Delinquent Tax Sale Laws/guidelines.

If need, let me know if I can answer any more questions.

Much Success As You Invest,

DelinquentTaxSaleInvestor, GdH-

ANyone have any info on Nevada? What things should one also look out for? Also whats the difference between special assignment taxes and others. thanks

Hi
Thanks for the detailed knowledge you share. You obviously don't mind spending your time helping people.

I live in Maine, and am looking to invest, in a diversified manner, in tax lien certificates only. My goal is simply COC return, not owning a property. From what I've been able to find out, Maine does NOT even offer tax lien certificates, but only tax DEED sales, which I gather to mean that I immidiately own the proprty, which I don't necessarily want. Not that I would MIND, it's just that my PURPOSE in investing is the higher return, vs. the prospect of owning a property.

This being said, I assume I can invest in TLC in any state, as long as I'm willing to do it either via mail or online. Now my "goal" would be to simply earn a great return on my money. However, I find myself wondering what I'd do if I suddenly found myself to be the proud owner of a duplex in Texas or Arizona while living in Maine!!

Thanks so much!!

Kenneth: Some tax deed states do have a redemption period. And not all tax deed sales are the same.

By this I mean that when a tax deed state does have a redemption period, the first time that a property goes through this process it will have that redemption period. If no one bids on it the county which oficially bid on it by giving the opening bid amount bought it and will offer it in another tax deed sale. Since it is now past the redemption period the high bidder may take possession of the property immediately upon recieving the deed.

So there are actually two different kind of tax deed sales even within one state.

As far as a forclosure process being judicial or non judicial. It does not really matter because the tax sale process is started by the county officially petitioning a judge for the right to sell the tax rights to the highest bidder at the sale. This is actually a judicial process that is done. So to say that foreclosures are non-judicial would be incorrect when speakiing of tax sales. It is always a judicial process.

Illinois actually offers as high as 18% every 6 months, which twice as high as Florida.

One thing I would suggest to people is to check their target state's and a bunch of the counties in that state's websites. Many of them have FAQs and list the rules. You can usually cobble together enough information to get 80-90% there.