Tax Sale Questions

1. How much money is reasonable to set aside for this? I am asking this because I am seeing from the 2008 sale results from Maryland (where I plan to invest) most of these tax certificates went to people and companies that bought them in groups. Do I have a chance if I am planning to buy them by individual properties?

2. Do you recommend going to see the property? I've been a landlord and rehabber for a couple of years and I always go see if the house is worth what I am thinking of paying base on location, condition, etc. Do you follow the methods in tax liens?

3. Once I buy the tax certificate on a property, does that mean I need to continue to pay the taxes on that property the next tax due date to maintain my position?

4. If I hold the certificate for longer than the redemption period, and file for foreclosure, do the positions of the mortgagees and other lien holders basically get wiped out? Do I need to file some action to clear title?

Thanks

Roger

Edited: 06/26/2010 at 07:27AM

Doug F.

Real Estate Investor · cleveland, Ohio

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Icon_minipost Mar 15 '09, 12:13 PM

I would also be interested in learning more about Roger's questions, and would like to network with others interested in investing in such notes.

thanks Doug

Edited: 06/26/2010 at 07:35AM

Jim Wineinger

Real Estate Investor · ten mile, Tennessee

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Icon_minipost Mar 16 '09, 03:47 PM

1. You must be prepared to outbid them. How much will that be depends upon the due diligenge that someone does and what they feel that property is worth. I am an individual and have bought at least one property at every sale that I have attended minus one. How much you will need is anyone's guess and cant be ansered directly but yes it can be done.

2.As part of your due diligence I would most definately go see the property or have a "drive-by" appraisal done. Especially when you first get into it. As you do more you will develop a feeling for things and can use other things in liu of driving by.

3. If you do not bring the taxes current it will be sold at the next sale and you will lose your position and can not forclose in most areas.

4. The issuance of a tax deed to you after forclosure by the county is supposed to clear the title of all previous liens (except any governmental liens). Some counties actually do this for you and some tell you that you should have a title search done as part of your due diligence before you invest.

There are two real potential problems here. If someone files bankrupcy during the redemption period they may be able to stop you from getting back even your investment. And even if you recieve a free and clear title from the county a lot of title companies will not guarantee their title search like the normal deed search would be and therefore some insurance companies will not underwrite the mortgage because of a possible "clouded title". This seems to be the case for about 2 years.

I have solved this by having my brother purchase the lien with my money and sell the tax deed to me a month after getting it and therefore I recieved the full clear deed with which I was immeadiatly able to get a HELOC which I used to fix up the property.

Edited: 06/26/2010 at 07:36AM

Ned Carey

· Maryland

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Icon_minipost Jun 08 '09, 12:49 PM

Roger I am just seeing this now and some of the Maryland sales have already happened. In fact I'll probably do a write up about the Baltimore sale on my website soon. Hopefully this is not too late to help.

1) you can start with a modest amount of money just don't expect miracles if you only have a little to invest. Yes there are a handful of very big bidders in MD but they don't get everything. My goal is to get some pieces that fall through the cracks. Some counties in Maryland have done auctions where you had to buy bundles of liens and that priced out the small players.

2) I recommend checking any property you plan to bid on. Especially if you plan on bidding in Baltimore. I have seen properties in Baltimore that were going to tax sale that looked great from the front but had no back wall.

Many people who bid in the nicer counties like Howard County just go by the assessed value.

3) In Maryland you do not have to pay subsequent taxes until you foreclose and then you need to pay them in order to record your deed.

4) In Maryland all mortgages and debts against the properties are wiped out in the foreclosure process (except IRS liens). Anyone with an interest in the property has the right to redeem in order to protect their position.

I am not an attorney the above is simply my laypersons understanding of the law. It is not to be construed as legal advice for your particular situation.

Edited: 06/26/2010 at 08:29AM by Ned Carey