My First Tax Lien Sale

Investor · Covington, LA · Member since 2012 · 517 posts · 317 votes

4y

@Will Sifert

Are those bidder big bidders winning a LOT of liens?

Hopefully some of these big money idiots will lose a lot of money and decide to get out of tax sale permanently.

It just shows a bidder number or id so I am not sure who they are. Here I can check the recorded records to see who the tax lien was made out to after the fact. I haven’t tried to do that in Colorado. I also haven’t run any reports from the final bids to see how many each number got. I bid mostly on land. I can’t imagine the ones bidding more than you could possibly make in interest being the big hedge fund companies especially on land.

I bet the big companies are bidding on houses and I am sure they have a formula where they can bid up to 9 months worth of interest for example. The probably know from doing thousands of liens the average redemption time is XX months. They lose on some but make more from others, overall get a 3% return etc.

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Karissa Sampson

CO · Member since 2020 · 63 posts · 40 votes

4y

Quote from @Will Sifert:

Quote from @Karissa Sampson:

@Atha Winston Thank you for your response. I'll let you know if I go and what my experience was.

@John Underwood In Colorado, there was a public outrage about tax liens and transfer of deeds so they've added on restrictions over time. We have a 3 yr redemption period. Any premium paid over the original tax lien amount at the sale is not required to be paid back by the property owner. There are minimum requirements for the number and timing of notifications you must send to the property owner (certified letter or similar I believe). I also believe once you apply for the deed at the end of the 3 yrs, they give one last notice to the owner and they have one last chance to redeem (a month or a few months, cant remember) before the deed is transferred. *If I'm incorrect on any of this, please chime in. I'm not an expert on tax lien sales in Colorado. Im just starting to look into them*

Seems like in Colorado, the laws are such that its nearly impossible to actually get a property deed out of a tax lien sale. I also have heard that many of the liens are going for large premiums and hardly any reasonable interest. Kinda seems to make tax lien sales a moot point. But, I'll see for myself at the tax lien sale.

Colorado is not a good state to invest in tax liens. I bought there for the first time a couple months ago, about 200 tax liens, I have a strategy but will be adjusting it some next year. The premiums being bid on almost all liens is insane. I had to bid in 13-15 counties to find a few I think will be worth doing again with my adjusted strategy. It hurts every time I get a check because I lose money one every one since it's only been a couple months.

In Colorado you do not get the premium amount back, the county keeps it. The in person auctions are much better but everything online is being bid way up. For example, a $1,000 tax lien on a decent house will sell for about $1200. So the high bidder paid a $200 premium (donation) to the county. The interest rate for 2021 was 9%. So you making $7.50 a month in interest. If the owner redeems after 2 months you get a check for $1015.00 but you spent $1200. Even if they home owner waits till the last month to redeem you would only make $270 in interest. Your net would be $70 for tying up $1200 for 3 years. Most don't wait till last month to redeem a lot redeem in the first couple months. In many cases when you pay a premium you will lose money. For the vacant land liens that are around $50 - $500 people are bidding way more in premium than you could possibly make from interest. All of those bidders are taking a lose on every single lien that gets redeemed in the hopes of getting a few deeds.

Yes Colorado is 3 year redemption period, after 3 years you apply for a deed usually about $300 and it can take anywhere from couple months up to a year before you could get the deed. The county will try to find the owners best they can once you apply for the deed. I imagine a lot are found and pay up.

You would do much better going to tax sales that are in person in smaller counties. If I lived there I wouldn't even waste time on the online auctions.

Thank you for such a thorough response. I had a feeling that tax lien sales in Colorado were not the best deal and probably not a great starting place to begin getting into tax lien sales. Someday I might look into those smaller/rural county in-person sales.

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Ned CareyPro Member

Moderator

Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes

4y

@Karissa Sampson many states are as competitive as Colorado. In my area interest is bid as low as 2%. As interest rates rise it is possible that some bidders may stop bidding interest quit as low.

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Will Sifert

Investor · Covington, LA · Member since 2012 · 517 posts · 317 votes

4y

Quote from @Atha Winston:

I have been a member for awhile now and I have been reading and learning about all the different strategies for Real Estate. I decided to go to my first tax sale which was very interesting. First of all they don’t truly advertise this information very much. I happened to scroll on the county website and came across the Tax Sale Package. In Champaign County there is a registration form that has to be filled out by a certain time. There is a 500 dollar deposit and fifty dollars for the available list which is sent via email. You get the list a week or so before the sale that way you can have time to focus on the parcels you want. Second; it is very important to know what your buying so go out and drive by this parcels!! Illinois has a 2 1/2 redemption period. However, this experience was fun. The day of the sale you can tell everyone is familiar with each other which let’s you know same companies come every year!! I had to make sure I bought one of my companies blank signed checks to the sale. It’s a requirement in order to participate. You choose a laptop and sit and wait for the sale to begin. Illinois is a bid down state which bidding starts at 18% down to 0%. Let me tell you know there were a lot of 0% winning bids. Which got me to thinking the whole point should be to gain interest off your investment for you solving someone’s problem for them! That’s just my thinking but it was sure fun to watch people slam their finger on that mouse to click zero. I walked away proud because the four parcels I was interested in; I was able to bid 18% & 12% and purchase those tax lien certificates. It was an eye opening experience for me and I will be back for next year. I am learning as I go. I am on my way to greatness one move at a time. I was just happy that I finally took a step and got my toe wet in something. I just wanted to share my first experience!! To anyone who reads this be blessed and have a wonderful day!!!

Make 100% sure you know what you are buying when it gets little to no bids. I know when I first started out and wasn't doing as much research as I should have been, when I bid on something and looked around and I was the only one, I always cringed a little. Crap, I hope I didn't miss something!! lol

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My First Tax Lien Sale

My First Tax Lien Sale

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